Little impact anticipated for UK SMEs if free movement of labour restricted post-Brexit

UK SMEs: Little impact anticipated if free movement of labour restricted post-Brexit

 

Nearly 9 out of every 10 (86%) of the UK’s SMEs will either benefit or feel little to no impact if free movement of labour is restricted post-Brexit, according to research from Close Brothers Asset Finance. 

The results were obtained from the Close Brothers Business Barometer, a quarterly survey that questions over close to 1,000 UK and RoI SME owners and senior management across a range of sectors and regions.

“While this result might be surprising to some, it’s important not to forget that a significant minority (14%) of businesses feel they will actually suffer,” said Neil Davies, CEO, Close Brothers Asset Finance. “And it becomes even more nuanced when unpicking the detail; for example, businesses with a turnover of over £10m feel they will be more affected than smaller organisations, with 26% feeling they will be negatively impacted, against only 5% of firms turning over less than £250k. 

“From a sector perspective, it comes as no surprise that the transport and logistics sector stands to be the most affected (23% ‘suffer’) since European drivers are currently propping up the shortfall in UK drivers.” 

Non-UK labour 

Nearly a fifth (18%) of UK businesses rely on non-UK labour to run effectively, with this figure rising to 36% for London-based firms. 

“Bigger firms in the SME market are the most reliant on non-UK labour and appear to have the biggest vested interest in understanding what is being done to ensure the rights of non-UK workers,” said Neil. 

Does your business rely on non-UK labour to run effectively? (based on turnover)

 

Under £250k

£250k - £500k

£501k - £1m

£1.1m - £5m

£5.1m - £10m

> £10m

Yes

7%

21%

23%

22%

38%

32%

No

91%

74%

70%

74%

61%

54%

Don't know

2%

5%

7%

4%

1%

15%

Labour costs 

Four times as many firms think Brexit will lead to an increase in labour costs against those who feel it will decrease (29% v 7%), while the remaining 64% are of the opinion that it will remain unchanged. 

“These results reflect the uncertainty currently being felt by SMEs,” said Neil. “No-one currently knows how the cost of labour will be affected, but again London businesses are the ones bracing themselves for an uplift in cost, with 45% expecting them to increase. Interestingly, the results for Wales mirror those of London.   

“From a sector perspective, nearly half (48%) of Print firms are expecting a labour cost increase.” 

Non-UK labour force distribution across the UK

What percentage of your employees are non-UK?

 

0% - 20%

21% - 40%

41% - 60%

61% - 80%

81% - 100%

UK combined

70%

17%

8%

3%

3%

North East England

65%

20%

9%

1%

5%

North West England

74%

19%

5%

-

2%

Yorkshire/Humberside

75%

18%

5%

1%

1%

East Midlands

78%

10%

7%

1%

3%

West Midlands

67%

22%

5%

3%

2%

East Anglia

73%

16%

7%

1%

3%

Greater London

43%

27%

17%

11%

2%

South East England

72%

16%

9%

-

3%

South West England

69%

19%

7%

3%

3%

Scotland

81%

8%

9%

3%

-

Wales

79%

13%

6%

2%

-

Northern Ireland

86%

12%

-

-

2%

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