Brexit: Threat to SMEs Relying on EU

Brexit: Threat to SMEs Relying on EU

EU-dependent SMEs are already being impacted by Brexit, yet struggle to export beyond Europe

10th February 2016

By Elma Glasgow

Small and medium-sized enterprises want to do more business with countries around the world, especially with emerging economies. However, they're hitting a 'BRIC wall', struggling to trade globally and remaining reliant on exporting to the EU as a result.

Leaving Europe would create a significant threat to UK SMEs, according to new research from insurer, RSA.

The New Internationals report, which quizzed more than 1000 SME owners and leaders around the UK, reveals that 72% of businesses have problems exporting outside the EU. More than 1 in 10 (82%) also cite European markets as key to their future growth.

Threat of Brexit

Uncertainty about Brexit is causing growth problems for more than half (56%) of UK SMEs, and 55% complain that the government isn't providing support in managing Brexit , Also, confusion on the UK's future role in the EU is rife, with two thirds (66%) demanding greater clarity.

With a possible EU referendum in June this year, nervousness is only likely to intensify among SMEs – the backbone of the UK economy – over the coming months.

The BRIC wall

Increased trading outside the EU could at least galvanize the UK SMEs against Brexit, should it happen. The RSA study says that 4 in 5 SMEs believe access to new markets is important to their firms, and the same proportion believe creating new customer bases in emerging markets (Brazil, Russia, India and China) is "critical".

The RSA also reports that barriers like red tape, lack of funding, no access to information and lack of international experience is holding back overseas growth for our nation's SMEs.

Small business owners' opinion contradicts government-led programmes to boost exporting, including its target to double exports to £1 trillion by 2020. In fact, 71% of business leaders want the government to help encourage free trade with emerging markets, and 74% are calling for less bureaucracy.

David Swigciski, RSA's SME Director, claims that current government support for exporting isn't working for SMEs, so many are "stuck in the gravitational pull of the EU". He explains:

Not only are our SMEs missing out on growth markets, they face significant risk from uncertainty over a possible Brexit and our future relationship with Europe. David Swigciski, RSA

The New Internationals also reveals that 74% of SME owners think the perception of the UK’s small businesses is out of date, with 85% being more globally minded that ever.

Swigciski wants SME government policy to be updated, saying the UK needs a 21st century framework for the 21st century SME.