A poll conducted by Redfield & Wilton Strategies this week aimed to discover how over a thousand directors and owners of small and medium enterprises (SMEs) view the coronavirus pandemic and the end of the Brexit transition period.
The new future relationship deal with the European Union entails the biggest regulatory change in how businesses trade with continental Europe in decades, seeing the end of free movement of people, services, and, in many cases, of goods. More than two weeks into this change, our poll finds a majority (56%) of SME directors and owners saying their business trades with the European Union. A fifth (20%) trade goods with the EU, a quarter (25%) trade services, and a further tenth (11%) trade both goods and services.
A plurality (39%) of SME directors and owners think the costs associated with running their business will not be impacted by the Brexit future relationship deal with the European Union, while a significant third (32%) think their costs will increase. Among those whose business trades goods with the European Union, 54% anticipate an increase in costs associated with running their business, while 24% anticipate no change and a further 11% anticipate a decrease.
A third (36%) of those who deal exclusively in services with the EU also expect their costs to increase, while 18% of this subgroup say they do not know. It is important to note that some issues pertinent to the services industry are yet to be decided and are subject to further negotiation.
A plurality (43%) of directors and owners of SMEs that trade with the EU say the Brexit future relationship deal agreed on Christmas Eve has had a positive effect on their business’ trade with the European Union, while 30% say it has had no effect, and a fifth (22%) say it has had a negative effect. In the lead up to the end of Brexit negotiations, Prime Minister Boris Johnson had warned that a no-deal Brexit was a ‘strong possibility,’ and many of these EU-trading businesses may have therefore been reassured as much by the certainty that comes with agreeing a trade deal as from the contents of the deal itself.
Half (49%) of those whose business imports or exports services with the EU say the deal has had a positive effect on their business’ trade with the European Union, while just 14% think it has had a negative impact. A plurality (44%) of those who trade goods with the EU say the deal had a positive impact on their business’ trade.
39% of owners and directors of SMEs that trade with the EU think their business’ trade with the EU will remain the same in the next year, while a similar portion (38%) think their trade will decrease. A quarter (23%) think their trade with the EU will increase. It is quite likely that the coronavirus pandemic and its economic effects both in the past year and the coming year play a role in these expectations.
The Brexit deal was announced days before the end of the transition period, yet the vast majority (71%) of directors and owners said their SME was prepared for the changes that came at the end of the year with the close of the transition period.
The majority of SME owners and directors whose business trades goods (68%) and services (64%) with the EU said they felt prepared, as well as a smaller majority (55%) of directors and owners whose SME imports and/or exports both goods and services. At the same time, a significant portion did not feel their business was prepared for the end of the transition period, including a fifth (20%) of those whose business does not do any trade with the EU.
Notwithstanding the overall high levels of preparation, the majority of those whose business trade with the EU in some capacity (53% to 59%) said Brexit has already had a noticeable impact on their business so far, and even a tenth (12%) of those that do not trade with the EU say they have seen a noticeable impact.
Altogether, half (49%) of SME directors and owners are generally positive about Britain’s future outside of the European Union, while 29% are pessimistic. Approximately a fifth (18%) are very optimistic.
Moreover, half (48%) of directors and owners of SMEs are optimistic about the future of their business after the UK’s exit from the EU, while only a fifth (21%) are pessimistic.
The majority (57%) owners and directors of SMEs that import and export goods with the European Union are optimistic about the future of their business, including 29% that are very optimistic. Over a quarter are pessimistic (27%). Businesses that trade services are equally optimistic. A plurality of businesses that do not trade with the EU at all (46%) are optimistic.
Ultimately, some businesses think that the costs associated with running their business will increase and their trade with the EU decrease as a result of Brexit. However, the majority owners and directors of SMEs think the Brexit deal agreed on Christmas Eve has had a positive effect on their business and are optimistic about the future of the country and their business outside of the European Union.