Time is Running Out for British Businesses to Prepare for Brexit

A great deal has been said in the media about Brexit, but amongst the posturing and rhetoric of various public figures, concrete information has been conspicuous by its absence from most discussions on the topic. Naturally, predicting the outcome of such an unprecedented event is a tough ask, but spin from both sides of the campaign is playing on the emotive nature of the topic and preventing people from forming balanced opinions.

As Richard de Meo, Managing Director of Foenix Partners, explains Brexit is an event that will have a profound effect on the UK economy – on life in Britain as we know it – and as such it is imperative that our SMEs are suitably informed as to the potential risk of an ‘out’ vote.

The prime danger to UK companies is the hit that their bottom line could take because they are unprepared for a Brexit, or are unaware of the financial outcomes that leaving the EU could have on them. SME’s account for 99.9% of all private sector businesses, employing over 15 million people and boasting a combined annual turnover of £1.8 trillion – 47 percent of all private sector turnover in the UK. They are integral to our economy and if we were to leave the EU, the financial damage they might incur would undoubtedly cause knock-on effects across the UK..

Given the stakes, it is quite staggering to think how little data and how much uncertainty still surrounds the referendum. A recent survey by Foenix Partners found that whilst 90 percent of mid-sized companies would participate in a referendum – and over 60% of these were opposed to leaving the EU – around a third are still not prepared for a potential Brexit.

45 percent of mid-sized businesses feel that a Brexit will negatively affect their balance sheet in the long term, while 41 percent remain unsure. Over 35% also felt that they were either reasonably uninformed or completely uninformed on the implications of an ‘out’ vote and it is vital that they find themselves in a position of confidence from which to decide their future.

Questions continue to surround the future of the currency. UK businesses are almost unanimous in their opposition to adopting the Euro, with over 92 percent against the idea.

Despite the aversion to the euro, projections for the impact on the pound were also bleak as 58 percent believe Brexit would lead to a fall in the pound, raising inflation in the process while 43 percent felt that it would result in a drop of overseas business investment in the UK. A worrying number of UK companies are exposed to sterling losses and yet are not hedging their risk at current deflated levels. Perhaps in the hope and expectation that sterling will rebound on the back of an ‘in’ vote.

Reducing the appeal of Britain to prospective foreign investors is counter-intuitive and the palpable concern from the UK’s community of importers is well founded. The retail and travel sectors could be hit particularly hard and they will be desperate for a successful ‘in’ vote.

While recent polling suggests that both campaigns are currently neck and neck, I still believe it is more likely that Britons will vote to remain in the EU, driven by the atmosphere of fear and uncertainty that a lack of information is generating. Small and mid-sized businesses stand to lose more from an unfavourable exit and generally can’t afford to take the financial hit that larger businesses would cope with. For this reason, I believe they are more likely to opt for the safety of remaining in the EU.

This all serves to underline the issue that all too often our businesses are not presented with the necessary information to make coherent long-term decisions. There is a unanimous craving for concrete information and it is not being satisfied. Our SME’s drive the UK economy, and we should encourage more businesses and entrepreneurs to start up. It is not possible to do this without giving them the tools and data that they need to decide what is best for the future of their businesses.

We have heard arguments based around ideology or politics. Now we need to make the necessary information available before the referendum and have a discussion based on facts. At this point a leave vote is simply too much of a risk for mid-sized businesses and the wider economic security of the U.K.

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