Brace Yourselves: SMEs Will Be Hit Hard by Brexit Research Suggests

New research suggests Brexit won’t be a good idea for the UK’s 5.5 million small and medium-sized enterprises (SMEs).

The UK’s ever-looming exit from the EU is set to threaten 15.6 million employees of medium businesses that represent 90% of the UK’s professional industries. Academics at St Andrews University conducted the study by surveying 10,000 business in England, Scotland and Wales.

The findings of the study highlight the surprising fact that Brexit might impact all sectors in a negative way.

The negative consequences for SMEs include:

• Lower levels of capital investment
• Reduced access to external finance
• Lower growth levels
• Reduced levels of research and development and;
• Lower rates of business internationalisation

Dr Ross Brown led the researchers and forecasts that the defining factor will be a reduction in capital investment which will limit and undermine the prospects of growth in all sectors.

“Most worryingly, these perceived negative impacts appear to be foremost in the minds of entrepreneurs and managers located in the types of innovative and export-oriented companies, which are often viewed as the high growth ‘superstars’ of tomorrow” – Dr Ross Brown

In other words, those businesses that are thought to be the most significant in terms of economic growth will be the hardest hit by Brexit.

Another worrying find is that Brexit will affect export-heavy companies, rather than service industries or tech companies that happen to focus on the UK’s healthy, but small, market. Globally speaking, Brexit puts our SMEs in a vulnerable position.

Information about the data

The study gathered data from the UK government’s longitudinal small business survey. The survey asked a number of Brexit related questions to a wide range of small and medium enterprises.

The study also revealed a divide in the UK, with businesses in Northern Ireland and Scotland viewing Brexit more negatively than those in England and Wales.

As the deadline of March 2019 draws near, the only sure thing is that the complex and indeterminate nature of Brexit is unlike any crisis UK businesses have faced in recent years. The ramifications of the UK’s exit from the EU are as yet unknown and until a deal is struck, the UK as a whole is left waiting on the government’s next move.

Let’s hope it’s a good one.

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