Despite the constant coverage, verging on national obsession, in the UK of the ongoing Brexit talks and processes, recent research has shown that 64% of Small and Medium Enterprises (SMEs) in Britain have not yet prepared a plan for the UK’s exit from the European Union. With the large-scale changes in regulatory requirements and the possibilities of tariffs being introduced where previously there were none, this failure to plan for Brexit could have massive ramifications for businesses around the country.
While employment in the UK is currently at its highest levels since the start of the century and manufacturing growth reaching record levels, this could all be put in jeopardy by an avoidance of addressing the biggest change to the UK economy since they entered the free trade area.
Confidence in the Government is Low
Recent research has also shown that confidence in the UK government to reach a deal with the EU over Brexit is very low, with 35% of businesses believing that no such agreement will be reached. This “hard Brexit” scenario would be a potential disaster with the UK’s terms of trade reverting to standard WTO rules whereby the EU could potentially punish certain industries very heavily with tariffs and restrictive regulations and standards. It is no surprise then to read that 43% of businesses have lost confidence in the government which, due to factional infighting in the ruling Conservative Party, and a disastrous snap election which saw it lose its parliamentary majority have so far been incapable of presenting a strong enough hand at the negotiating table.
One of the surveys was produced by Bibby Financial Services, with their CEO, Edward Winterton, commenting that: “Uncertainty isn’t good for business and Brexit is uncertainty in its most acute form.”
What Businesses Want
The businesses do however have their own ideas as to what the government should be working on to ameliorate the potential Brexit effects, with reduced VAT and other taxes the highest on their wish-list. The possible impacts on employment in the UK are clear however from the 10% fall in confidence among businesses despite the current boom they are experiencing. With nearly 20% expecting profits to drop post-Brexit, the continuing hiring issues facing companies and almost 25% preparing to cut costs, employment in the UK is facing an uncertain period as the country approaches Brexit.
The approaches businesses will take to handle the effects of Brexit will vary but many are already starting to pivot towards new fields to make themselves more agile in the face of political uncertainty. Nearly a third are already focusing more on goods and technology seeking to make the most of the conditions which have seen the UK emerge as one of Europe’s most important tech hubs. This has been one area where the government has indeed performed well, with special regulations and increased investment in the area leading to technology businesses creating twice the amount of jobs as non-tech sectors as well as paying a massive 44% higher wage than the national average.
Overall, concern by businesses over their future after Brexit is understandable. However, the growing uncertainty hasn’t been helped by their own stasis regarding the future and the knock-on effects for employment in the UK are unlikely to be positive.