As the 29 March deadline inches closer, there are still question marks around what the UK economy will look like post-Brexit. One question in particular is particularly pressing and that is how small and medium-sized enterprises (SMEs) will be affected when Britain leaves the European Union.
Shortly after the referendum in 2016, Theresa May said these 5.4 million small and medium-sized businesses are the backbone of the British economy and a “fundamental part of[her]vision of building a country that works for everyone, not just the privileged few”.
Last April, in the wake of the collapse of Carillion, Oliver Dowden MP, the Minister for Implementation, penned a piece for the Daily Telegraph where he argued that small businesses are vital for promoting competition in the marketplace and set a challenging aspiration that 33 per cent of procurement spend should be with small businesses by 2022.
However, much has changed over the last year. The Conservatives, previously the party of business, have apparently drastically changed course. With Boris Johnson’s infamous quote about business in June, and with large corporations starting to pull their investments from the UK, what are the chances for small businesses in a faltering ‘reality Brexit’ economy?
According to researchers from the Universities of St Andrews and Essex, how an SME will fare after Brexit varies wildly on their sector, size, and circumstances with “those operating in hi-tech and service-related industries [the]most concerned.”.
The analysist continued: “Worryingly, [the]perceived negative effects appear to be foremost in the minds of entrepreneurs located in the types of innovative and export-oriented companies, often viewed as the high growth “superstars” of tomorrow. In other words, firms thought most significant for boosting productivity and economic growth have the gravest reservations about Brexit for their future success.”
Last month, in an attempt to slow the tide of negative stories coming from the business community as Brexit looms, the government launched a £2m Business Basics Fund to help SMEs grow. However, the fund was quickly shot down as a PR exercise, with the figure essentially a rounding error in the scale of private business loans and other investments in UK-based SMEs by the private sector, via Liberis and other firms. Brexit is expected to make the UK £100bn per year worse off by 2030, with a significant portion of that pain felt by SMEs, a short-term £2m investment competition is no alternative to free and frictionless trade with the European market.