35% of small businesses say they have already been negatively affected by Brexit

Reported in City AM, Belfast Telegraph and Scottish Herald – 13.2.17

 35% of small businesses have already been negatively affected by Brexit, reveals research published in our annual owner managed business report.

The fall in sterling after the Brexit vote has been a key issue for businesses, with exchange rates particularly affecting those small businesses that rely heavily on imports from overseas.

The increase in prices caused by exchange rates has been felt by businesses of all sizes, up and down the supply chain, but was most widely publicised when Tesco withdrew Unilever products from its stores in October 2016. Unilever said the increase in imported goods had forced them to raise prices, which resulted in popular brands such as Marmite and PG Tips briefly being withdrawn from the supermarket.

Owner managed businesses throughout the economy have been affected in this way, and have been forced to raise prices or see profit margins eroded as their costs rise.

Our annual survey of owner managed businesses surveyed close to 700 business owners to determine their views on Brexit and the outlook for their business in the year ahead.

Mark Lamb comments: “Just six months on from the Brexit vote a large number of owner managed businesses say they have already been affected by the UK’s decision to leave.

“The fall in the pound has meant that imports of raw materials and other goods are now significantly more expensive for businesses, particularly for those smaller businesses with a smaller cash cushion to fall back on.

“General uncertainty over the future is also a key contributor for some as clients put projects on hold and customers pull back on spending.”

Support for Brexit grew since last year’s survey

Our owner managed business report finds that more business owners agreed with the result of the referendum than the previous year. In 2015 17% of business owners surveyed agreed with Britain leaving the EU compared to 32% in 2016.

Whereas in the previous year some business owners were still on the fence over the Brexit vote, many of the 23% who were previously undecided in 2015 have now come out in favour of Brexit.

In addition, the result of the referendum had shaken business confidence and concerns over access to skilled staff, and investment had meant that business optimism had fallen in the last year.

Our research revealed that 59% of business owners surveyed were confident about the year ahead, compared to 77% of businesses the previous year, and a three year low since 2014 when 76% of businesses were optimistic for the year ahead.

Access to investors and skills shortage are key concerns

Other key findings of the survey included:
  • 23% of business owners voiced concerns that leaving the EU would make UK businesses less attractive to investors.
  • 18% of business owners were concerned that Brexit would affect their ability to hire skilled staff.
Mark Lamb continues: “The uncertainty of what Brexit will mean seems to have already made it harder for the UK’s small businesses to attract skilled staff from the EU, and many are concerned that this will continue.

“The UK and in particular London is home to a huge number of businesses whose access to both investors and workers from across the world is vital.

“Confidence among smaller businesses is falling sharply- and the way that Britain exits the EU will play a significant role in determining whether this rises or falls again in the next couple of years.”

To download a full copy of our 2017 owner managed business report entitled “Strength amidst uncertainty” please visit our report microsite here.