How SMEs can prosper post-Brexit

If you look at the headlines lately, the UK’s moves to leave the European Union will be a disaster for business. Recently I read a research analyst’s note forecasting several “icebergs” that will be placed in the way of the UK economy, from inflation to possible recession.

But leaving the bloc will not be the disaster many people think it will. In fact, there are many reasons to believe Brexit will actually be a boon for British businesses.

Let’s get the big picture out of the way first - the European Union has lost its way. What was conceived as an economic union of individual nations, and to help France and Germany come together, has, over the years, developed in to more of a political union.

With so much European legislation now transposed in to UK law, we no longer feel the economic benefits alone. With the powers that be keen to upgrade a “United States of Europe” which would enjoy its own army, according to reports, the time was right to reboot our relationship with Brussels.

Trade deals

Businesses are not as worried about Brexit as you may think. A recent YouGov poll of small businesses showed just eight per cent think the event may have a major effect on their businesses. Out of more than 3,000 customers for our accountancy service, just two emailed us in the days after the referendum to enquire about the effects.

But Brexit won’t merely leave entrepreneurs unscathed. The chief benefit to our small and medium enterprises will be freedom. Soon, the UK will be free to strike its own trade deals outside of the EU, not just abide by the terms struck by officials of the bloc.

Strasbourg and Brussels are notoriously slow to pore over and ratify paperwork. We can be confident that UK policymakers will have the urgency and foresight to negotiate the best deals in the interests of British businesses alone, opening up market opportunities the world over.

Europe is but one continent in the world. For us to be constricted by being hemmed to its lumbering trade deal architecture, has not served us well. 

Weak pound

These long-term benefits may be hard to imagine when all you can see, this week, are the headlines about a plummeting pound.

But currency chaos will be short-lived and, whilst a low pounds may not sound like a business benefit, there is at least one class of business to which the trend can be advantageous - exporters.

A weak pound means businesses that export can sell their goods for relatively higher cost than previously, while it also means those in other countries can buy pounds more cheaply, encouraging a bump in tourism that can radiate across all sectors of the economy.

Selling to overseas buyers has always been a good idea. But I would further encourage all business owners to look at export markets - this opportunity just opened with even more gusto.

Goods arrangements

These gains may yet offset the negative consequences of trade tariffs imposed on UK goods down the line, something which, regardless, I don’t think will come to pass.

Whilst the chances of the UK retaining membership of Europe’s Single Market may be in the spotlight, I believe we will retain strong free-trade relationships with these countries nonetheless.

These countries take more of our goods and services than we do of theirs. In fact, since 2007 we’ve seen exports of goods to non-EU countries rise by 54 per cent, whilst goods exports to EU countries rose only by 15 per cent. Some 16 per cent of the EU’s good and services go to the UK today - if they imposed tariffs, it will cost them more than it costs us. These countries are going to have to strike trade agreements with us, more for their benefit than ours.

We can certainly expect those deals to come at a price. They won’t let us have it all our way, there will be a compromise price we have to pay - be it free movement of people or ongoing financial contributions, for example.

Be confident

For British businesses, this is going to be a time for resurgence. We hold more cards than you might think. For example, if European countries impose punitive tariffs on importing their goods to us, we can simply buy from elsewhere.

There are good reasons why British businesses will thrive. According to the World Bank, the UK is the seventeenth easiest country in the world in which to set up a business, whilst Germany languishes at 107. We also have one of the lowest corporation tax rates of any economy, while the last government pledged to reduce it still further.

The UK will introduce employment law that is a lot more flexible than Europe’s, which can often err too much on the side of employees, even when businesses need to dispose of underperforming staff.

We are moving toward greater self-control. Today, we have a lot of German, French, Italian and Spanish cars on the road - even whilst consumers in those markets tend to buy indigenous brands. But, Japanese brands like Nissan and Toyota are just as highly regarded.

No wonder the majority of small businesses believe the UK’s economy is in good shape following the referendum vote, according to a recent poll by Bank Of Cyprus. We are moving in to an era when we will have the flexibility to make our buying and decisions with flexibility and freedom at the global level.

It’s important that, three months on from Brexit, small businesses don’t lose faith in the British economy and continue to prosper - as they have, and always will. After the short-term pain, UK businesses are set for a bright future of long-term gain.

Lee Murphy is the owner of Pandle cloud accounting software. 

Image source: Shutterstock/JMiks