A new QCA survey of UK small and mid-cap companies reveals that the majority believe that preparing for Brexit has negatively affected their business.
The UK has over 1,200 small and mid-sized quoted companies, and a survey conducted by YouGov has examined how the last three years of the country preparing for Brexit since the 2016 referendum has impacted them.
It found that 59 per cent of small and mid-caps said that preparing for Brexit had taken away time from other business priorities.
In addition, 43 per cent said that the possibility of leaving the European Union has had a negative impact on their company’s turnover growth; 16 per cent have invested less in the UK because of Brexit (although for the majority it has had no impact); and 31 per cent said that attracting EU nationals has got harder since the 2016 referendum. This reported undermining of growth in the UK’s companies comes at a time when the UK economy has shrunk in size for the first time in seven years.
Further to this, the survey found that businesses believe that the information given to them by the UK Government to help them prepare for Brexit has been inadequate. In fact, only one quarter of small & mid-caps believe the government has provided the right information to help them prepare for Brexit.
One survey respondent said: “The guidance has been very high level but there are a raft of unknowns around leaving without a deal where the government could have stated clearly how they would operate (which would have also signalled preparedness to leave with no deal to the EU).” Another said: “There are still too many open questions where decisions haven’t been made, making it very difficult to plan.”
In spite of this, the majority of small and mid-caps are taking action to prepare for a ‘no deal’ Brexit. This is the scenario where the UK would leave the European Union overnight with no agreement on the ‘divorce’. This means that UK companies would have to deal with the checks at borders and pay the tariffs that are currently removed by being part of the single market and customs union.
More than half of companies (54 per cent) have taken steps to prepare for a no deal scenario, whereas 42 per cent have taken no action.
Stockpiling goods (17 per cent) and moving operations outside of the UK (14 per cent) are two of the most popular actions. Others have hedged currency, or simply set aside contingency funds. Perhaps unsurprisingly, small and mid-caps are most likely to favour remaining in the EU of all the potential scenarios that could unfold in the coming months from Brexit.
47 per cent of small and mid-caps say it would be best for their company if Parliament revoked Article 50 and the UK remained in the EU under its current terms. Only 14 per cent believe that the Government taking the UK out of the European Union with no deal would suit them.
What pretty much all businesses want is certainty for the future. This allows them to plan and invest for growth. As one survey respondent said: “All small companies need is clarity – they naturally have to invest to grow – and they are unable to do so at the moment.”
As mentioned, the UK’s small and mid-caps are most likely to favour that certainty coming from revoking Article 50 and remaining in the EU. But the political winds are not with them and we wait to see what direction the Boris Johnson Government, and Parliament, will take us in the coming months.
Anthony Robinson is head of policy and communications at the Quoted Companies Alliance (QCA)