What could potentially happen to small businesses as a result of Brexit? Find out in our blog
Theresa May has finally fallen on her sword. On Friday morning, she announced she would resign as leader of the Conservative party effective June 7th, 2019. She will stay on as Prime Minister, continuing to govern the country and fulfill her official duties until a new leader is elected.
While Theresa May’s fate is now sealed, the fate of Brexit will only likely become clear during the leadership contest to replace her. If, as many expect, the new leader is a Brexit advocate, they will have to decide whether to renegotiate Theresa May’s deal once more or to leave without a deal on the 31st October 2019.
If the UK proceeds with leaving the EU without a deal on the 31st October, Brexit will undoubtedly be a disruptive force for small businesses, but will it be a force for good or bad and where will small businesses feel the impact the most? In this blog, we’ve outlined the four key areas in which small businesses could most feel the consequences and how our expansive portfolio of In Touch members could help in supporting small businesses through these periods of change.
The end of free movement and tighter immigration rules post-Brexit will force many small businesses to rethink both their recruitment and their skills strategies. Statistics already show that businesses are feeling a tight squeeze on talent. According to a recent survey from the Chartered Institute of Personnel & Development there was approximately a 95% fall in EU nationals joining the UK workforce between the first quarter of 2016 and the first quarter of 2018. Low unemployment and a continued appetite for hiring across all sizes of businesses has seen 44% of employers experience recruitment difficulties during 2018 with another 34% struggling to retain staff.
Over the longer term, however, employers may get some respite from the Government’s proposed post-Brexit immigration system. The proposals include the introduction of a 12-month work visa for low-skilled immigrants and the scrapping of the current cap on the number of highly skilled immigrants.
Many of the professionals on our network have secured roles with enterprise-level organisations with international workforce numbers of 10,000+ As a business on our network you can access our Ask an Expert feature and connect with members just like this and get support for any employment related questions you may have.
Accessible and sustainable finance underpins business growth, and a period of market turmoil as a result of Brexit is likely to result in restricted lending to small businesses.
Conscious of the potential impact of Brexit on small business funding, the UK Government has committed to establishing a UK Shared Prosperity Fund. The fund aims to tackle social inequality by raising productivity, particularly in the less economically advanced areas of the country. SMEs should find it easier to access finance through the new fund, just as soon as the Government publishes details of what it will look like.
As a result of the changes, non-executive directors with recent and relevant financial experience will be much more in demand. Through our board recruitment services we can help you to find the most apt non-executive director for your board who is both financially literate and able to communicate how the changes will affect you and the next steps you need to take.
Growth and Trade
Prior to the June 2016 referendum, the UK was one of the fastest growing economies in the world. By the end of 2018, it was the slowest. Although the International Monetary Fund has predicted that the UK will continue to grow at a rate of just above 1.5% in the coming years, its forecast assumes that the UK leaves the EU in an orderly fashion, with a broad free trade agreement with the EU in place. Some SMEs are opening offices in EU 27 countries, making it easier for them to tap into new markets and access new talent pools. Brexit uncertainty is also having a positive benefit on certain businesses due to manufacturers stockpiling raw materials and finished goods.
Trade is the area where Brexit has the greatest scope to bring positive disruption, since UK goods and services continue to be sought across the world. In 2017, the UK exported around £342 billion to non-EU countries and a further £274 billion to EU countries. As of June 2018, the UK’s exports were 4.4% up on the same time a year prior, with the trade deficit narrowing by £6 billion over that period.
The shift towards an economy that is exporting at a faster rate than it imports should benefit UK SMEs, especially if the Government brokers new trade arrangements with the EU and other countries. However, it will take some time for the UK to negotiate numerous bilateral trade relationships, with the ongoing uncertainty potentially detrimental to exporters. In addition, most SMEs tend to export their goods and services close to locations whereby they operate, which means they are still far more likely to target EU countries than more distant markets such as Brazil or China.
Although what happens next is uncertain, In Touch has services to help guide your business through it. Using our board recruitment services, we can help you to build a perfect board of professionals who can guide you through the uncertainties of being a growing business during Brexit. You can post your vacancy to over 40,000 pre-vetted professionals, many of whom are experienced in working with SMEs, connect with them directly and source the best talent to help you overcome any uncertainty as a result of a no-deal Brexit.