Who’s afraid of Brexit? Small UK firms are, new survey shows

Uncertainty over Brexit has left small British firms unprepared for the potential negative effects of leaving the EU.

    A Bank of England report published last month showed that just under a fifth of businesses were 'fully ready' for a no-deal Brexit [File: Vickie Flores/EPA]
    A Bank of England report published last month showed that just under a fifth of businesses were 'fully ready' for a no-deal Brexit [File: Vickie Flores/EPA]

    More than a third of small companies in the United Kingdom think a no-deal Brexit on October 31 will hurt their business, but they are unprepared to deal with the fallout, according to a survey published on Friday.

    The Federation of Small Businesses (FSB) said 39 percent of small companies thought a no-deal Brexit would have a negative effect, compared with 34 percent who thought it would have no impact and 11 percent a positive impact. The remainder said they did not know.

    Most of those firms who thought a no-deal Brexit would harm their business said they were unable to plan for this scenario.

    After more than three years of crisis since a majority of Britons voted to leave the European Union, it remains unclear how, when or even whether the country will leave the bloc it joined in 1973.

    Prime Minister Boris Johnson has promised that the UK will leave the EU on October 31 with or without a deal and has said he would not seek an extension even if the conditions of a recently passed bill were met, forcing him to do so.

    "As the risk of a chaotic no-deal Brexit on October 31 remains alive and kicking, it is worrying that many small firms have either not prepared or are finding that they can't prepare," FSB national chairman Mike Cherry said.

    Despite this, it is still not clear how the UK will leave the EU and "ongoing uncertainty is to blame for preparations hitting the skids," he said.

    The average cost of small businesses' preparations for a no-deal Brexit stood at about 2,000 pounds ($2,470), rising to 3,000 pounds ($3,700) for companies that import and export, according to the FSB's survey of 1,062 firms conducted in late August.

    Cherry said small businesses should be given vouchers that could be used to spend on hard Brexit preparations such as finding new export markets. The government announced a 10 million pound ($12.3m) Brexit support scheme in August, but the funds are directed towards trade groups for things such as training events and advice packs.

    A Bank of England report published last month showed three-quarters of businesses thought they were "as ready as they can be" for a no-deal Brexit, with just under a fifth "fully ready".

    Business investment has stagnated since the 2016 Brexit vote, leaving the economy more reliant on household spending for its growth.

    A separate survey on Friday showed consumer confidence edged up unexpectedly in September, although it remained at subdued levels.

    Market research firm GfK said its index of consumer sentiment, produced for the European Commission, rose to negative 12 in from negative 14 in September. A Reuters poll of economists had pointed to an unchanged reading.

    "Yes, all sub-measures are higher, but they are anaemic in the case of our purchase intentions and how we view our wallets, while the results on the wider economy are still depressed," said Joe Staton, client strategy director at GfK.

    SOURCE: News agencies