In the first part of Moolr’s look at Brexit, we examined what Brexit was and how it came about. In Part 2, we take a look at its possible ramifications for the public and businesses in the UK.
First and foremost, amongst all the debate about the EU it is becoming clear that many small business owners have not considered the impact of the EU on their business. Since the referendum, it has dawned on many the possible ramifications of exiting the EU.
A survey conducted shortly after the vote saw that 70% of bosses believed that the UK’s membership of the EU has no effect on their business planning. A mere 8% said that the debate surrounding Brexit has a major effect on strategic planning. i imagine a similar vote today would have very different results.
Those that are for leaving the EU have always argued that it would create a jobs boom when companies no longer have to comply with EU regulations. Certainly many SMEs would welcome a cut in red tape and what they see as petty regulations. However, this has sadly not proven to be the case, as an exit draws closer (possibly!).
Some small businesses see EU regulations as an unnecessary cost, especially within the food and drink industries. It is often the case that these regulations affect SMEs disproportionately. However, the lack of trade deals and the uncertainty brought about by Brexit more than offsets any gains by eradicating red tape.
Brexit would mean an end to any EU regulations that have not already been implemented into UK legislation. It would remove the need for any new EU directives to be incorporated into UK law. The government would probably seek to repeal some of the existing EU legislation that is already law in the UK. This would be in order to enable UK businesses to gain a competitive advantage in Europe. That is the theory anyway.
However on the other side of the argument there is a concern about some of the positive influences of EU law potentially being lost. Such as consumer law, which has to date been largely EU-based. Protection for food standards are already in danger of being lost. This is extremely worrying.
So there would be various complexities in terms of regulations and laws which would take some considerable time to work through. This means that when Britain leaves the EU, most things would not immediately change.
Exporters and importers from the EU naturally have a strong opinion on staying in the EU. That is aside from the risk of restrictive trade practices such as trade barriers or tariffs or quotas. they may need to work harder to position the UK as a compelling and attractive business proposition. The decision to leave the Eu has already had disastrous consequences for many UK businesses.
Businesses who employ non-UK nationals are also more likely to vote for continued membership. These businesses need to be aware of the potential impact of Brexit on the areas of immigration and work permits. This has not wholly been the case however. Many owners of Indian restaurants collectively voted Leave. They now find themselves lacking a workforce. Many of their employees have left the country since the referendum.
Many banks have already reduced their lending to SMEs post-recession and this may only get worse, with far-reaching consequences. Banks do not like risk, and the exit from the EU has brought more risk than ever seen before.
A real issue for small businesses to date has been a lack of solid information. Information on how staying or leaving will impact the future of their business. In a Telegraph Festival of Business survey, only 48% of those questioned felt that they had all the facts available to make an informed decision. Little has changed since the survey, with uncertainty greater than ever. No raft of trade deals have been agreed to replace what we had before. There is not even certainty on how goods vehicles will get through borders here and in Europe. Most small business owners rely on television and radio to help inform their view. For many of them it was hard to distinguish personal opinions from professional views.
Probably the largest immediate threat for all businesses is the uncertainty. And also the conflict between short-term outcomes and long-term impacts. For small businesses there are also inevitable knock-on effects from the decisions made by larger businesses. For example if large international companies decide either to leave the UK or relocate their HQs in the event of Brexit. Many of course already have, decimating communities across the UK. On the flip side, there is a concern fewer companies will decide to set up in the UK in order to be able to access the EU. This will impact the potential reach of smaller businesses.