What Impact will Brexit have on Small Businesses? image

What Impact will Brexit have on Small Businesses?

Staff Squared date icon9th August 2019

Tag iconSmall Business

Whether you’re for or against Brexit, you’re sure to be up to speed with the current goings-on from our new Prime Minister to the (once again) delayed Brexit date. But are you aware of how the United Kingdom leaving the European Union will affect you as a small business?

Before we get down to the details, let’s look at what Brexit actually is in its simplest form.

Everything you need to Know about Brexit put Simply.

The term ‘Brexit’ is a shorthand way of saying that the UK is going to leave the EU, merging the words Britain and exit to form a seemingly quirky portmanteau. 

Brexit is the result of a referendum held in June 2016, in which more than 30 million people across the UK voted to either remain or leave. The results of the vote saw 51.9% of people choosing to leave the EU, with 48.1% wanting to remain. As it stands, the UK will be leaving the EU at 23:00 GMT on 31st October 2019. 

A transition period is part of the withdrawal agreement which refers to the period of time between Brexit actually happening until 31st December 2020 (or possible, later). This time is intended to allow businesses and all others to prepare for when the new post-Brexit rules between the UK and the EU come into place. This period would also allow time for a new relationship between the UK and the EU to be established and for the UK to strike its own deals; however, this all rests on the withdrawal deal being ratified. 

If the Government fail to reach a deal, the so-called ‘no-deal Brexit’ would sever all ties between the UK and the EU with immediate effect, leaving no room for a transition period and no guarantees on citizens’ rights of residence. 

What does this all mean for Businesses?

It’s feared that having a no-deal Brexit will cause considerable disruption to businesses in the short-term, see long tailbacks of lorries at channel ports as drivers will be subject to new checks on their cargo, shortages on fresh produce for food retailers an interruption of supplies from EU countries to the NHS. Government ministers and multinational companies with factories in the UK have also warned about the long-term impact on the British economy. 

However, Brexit-supporting MPs claim it would not be as bad as they say and the UK would save on the £39 billion divorce bill, as well as being free to strike its own beneficial trade deals around the world.

With a mixture of messages being given, it’s hard to understand what impact Brexit will have on small businesses at all. 

If you’re one of those independent traders, an entrepreneur or a company owner, you’ll be eager to know what Brexit means for small businesses like yours. 

This landmark decision is potentially going to impact our economy, enterprise and employment in many ways. Some are worried about staffing shortages as a result of tighter immigration controls, while others are concerned about import issues. 

Staffing Issues

Traditionally, businesses such as in the licenced trade, hospitality, domestic care and cleaning employ immigrant workers. This is usually due to the nature of the work, the pay on offer, shift patterns or location; and for this reason, hoteliers, publicans and coffee shop owners might well be concerned with a post-Brexit labour market. 

The job roles that may get affected by the UK’s departure from the EU will need to be filled somehow since, let’s face it, whatever state the economy finds itself in, a western democracy like ours won’t last long if we can’t book a clean hotel room, enjoy a pub lunch on a Sunday or pick up a flat white on our way to work! Perhaps that is why there are so many lucrative business opportunities in the service sectors.

Restricting this free movement of labour will have a negative impact on some businesses, particularly those that employ from within the EU. 

On the other hand, though, a counter-argument can be made that a post-Brexit society will provide more opportunities for UK citizens, so long as they are sufficiently skilled or have access to training. 

Free Trade

The other main issue surrounding the UK’s exit from the EU is the distinct possibility that we’ll witness the end of free trade. However, what Brexit means actually for small businesses that import from and export to the EU is still unclear; and until a decision on a deal or no-deal Brexit is determined, the jury is still out on its overall impact to trade.

Importing Costs

There are a number of unanswered questions when it comes to Brexit and nothing is certain at this point in time. 

Will importers be hit with more costs, more restraints and more bureaucracy? 

What will that do to their margins and their overall consumer appeal? 

Will importers have to look to countries outside of the EU? 

What about businesses that already trade outside of the EU? 

What is clear, however, is that if you survey companies that already trade with Europe, the vast majority will continue to do so, whatever happens after the Brexit negotiations have finally concluded. What they would like to know, though, is how smoothly they can trade, at what cost and whether there will be any punitive restrictions put in place.

The Outcome

It’s fair to say that the widespread pessimism about Brexit hasn’t manifested itself in quite the way many expected. The economy is pretty buoyant, at least compared to the rest of the world – but all of the uncertainty swimming around as a result of the ‘up in the air’ status of Brexit at the moment definitely doesn’t help that economy. Most business owners would like to see progress, decisive action and the opportunity to get on with things, but (unfortunately) we’ll have to sit tight for a bit longer to know exactly what Brexit means for small businesses across the UK.

In the meantime, HR should be thinking now about what impact, if any, it will have from a resourcing perspective – particularly around the provision of visas. That’s one of the tangible things you can work on right now. Beyond that, it’s prudent for Brexit to be on your radar but, until we know exactly what it looks like, it’s a bit of a waste of resources to plan out lots of ‘what if’ scenarios.

Written by Clarisse Levitan

Lead Customer Support Agent - Staff Squared

Clarisse works as the Lead of our Customer Support Team to provide all of our customers with the very best care and guidance when using their HR software.

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