For many months, talks between the UK and EU have been far from fruitful, but there seems to be an end in sight. A provisional deadline to leave the EU has been set – 9th March 2019 – but its implications are still unknown.
Many of the more than 5.4 million SMEs in the UK will be watching events in Brussels closely. Anxiety about what sort of deal will be reached is present, but even in the worst case scenario, will small businesses suffer? Those who do a lot of trade with EU member states could lose out, especially if the UK withdraws from the single market.
Germany, France and the Republic of Ireland are amongst the country’s biggest trading partners. Much of that trade is made easier because of EU membership, where free trade has enabled a lot of businesses to build up links with other parts of the continent. In most cases, this would change after Brexit.
Making plans
A survey conducted amongst SMEs revealed that many of them are planning for life outside the EU. However, two-thirds said that access to the Single Market was essential if they were to continue trading with Europe. As it stands, this is unlikely, but many individual member states will see the UK as a vital trade partner, not least Ireland.
The possibility of a ‘hard border’ between the Republic and Northern Ireland is something that both the British and Irish governments are looking to avoid. Northern Irish SMEs would face extra paperwork and extra costs in the event of a hard border being erected after 2019.
Speaking of costs, access to finance is another issue that concerns small businesses. After Brexit, there is no guarantee that many of the country’s banks will readily offer them money. If this is the case, they are likely to look elsewhere for a business loan. Approaching providers such as Market Invoice for a loan could be their best option.
Future opportunities
The picture for SMEs is not entirely bleak, with new opportunities likely to present themselves. Businesses who do most of their trade on these shores are well-placed to profit from customers who prefer to “buy local”. Buying British goods will help companies to save on the costs associated with importing.
Hiring more home-grown workers is another potential positive that may arise from Brexit. SMEs who are dependent on employing people from the EU because they have the skills may lose out if immigration laws are tightened. Hiring local talent may work out cheaper, plus with EU workers leaving, it has helped to see workers’ pay increase slightly.
Finally, partly through necessity, trading more with other parts of the world such as Asia and the Americas could open up new deals for some businesses. They are not bound by as many rules as they would be when trading with the EU, whilst the Pound’s fall in value against the Euro may make it more lucrative to trade in Dollars, Yuan and Yen.
