UK small businesses were left with a great deal of uncertainty following the vote to leave the European Union. During the lead-up to the referendum, different opinions divided UK companies, with some believing that leaving the EU would free Britain from the red tape of EU legislation, while others feared that trade may suffer. Business lobbies, including the Federation of Small Businesses, are calling for clarity from the Government so that UK business can continue to build a future, without the uncertainty following Brexit.
Employment law and immigration
Brexit may mean that some of the current EU employment laws could be repealed or amended, but increased immigration control may be a concern for small and medium enterprises that rely on large numbers of EU citizens. Legislation post-Brexit may mean that work permits will be required for EU citizens working in the UK, thus increasing ‘red tape’ for small businesses or leading to a loss of valuable skills.
Funding for small businesses
Although small business funding probably won’t be affected by Brexit, as most companies obtain finance from local organisations, the impact on the pound following the decision to leave the EU could have a bearing on interest rates. If this happens, small businesses may find that they are facing much higher costs for funding than previously, which may impact on the profit of the company. Higher costs due to fluctuation of the pound may also lead to increased prices, in the UK and for exports, which may impact on trade.
Positive outlook for the UK’s small businesses
Brexit may have some positive effects on the small companies in the UK. Immediately following the outcome of the EU referendum, the value of the pound fell. Although this isn’t generally considered to be good news, it may increase tourism in the UK, which will bring more trade to the country. Companies in Europe may decide to trade with UK businesses due to the weaker pound. If employment laws are affected by Brexit, this may mean more freedom for small business, which is positive news.
Although the outcome of Brexit will remain unclear for some time, it is crucial that small businesses in the UK plan for the future, initiating a business plan that will allow for changes. Outsourcing to a management accountants may relieve the pressure of uncertainty for some small businesses, and will also provide expert knowledge in some areas of the company.
For a discussion about Brexit and its potential impact on your company, call us to arrange an informal meeting.