“Much attention is being paid during the EU Referendum campaign to the views of large corporations advocating Brexit or Remain. This is perfectly understandable. These big businesses are very important in our economy and society. But as we reach the final campaign stages of the EU Referendum, far too little thought is being given to the UK’s small and medium sized businesses.
Iain Hasdell, Chief Executive of The Business Growth Foundation, calls for Government to establish an SME Task force to address key concerns for the sector as referendum looms.
“Much attention is being paid during the EU Referendum campaign to the views of large corporations advocating Brexit or Remain. This is perfectly understandable. These big businesses are very important in our economy and society. But as we reach the final campaign stages of the EU Referendum, far too little thought is being given to the UK’s small and medium sized businesses.
“SMEs are 99% of all our businesses in the UK. Their combined annual turnover is £1.8 trillion. They employ 15.6 million people. Because SMEs tend to be innovative and are not as dominated by the cost control paradigms of the biggest companies, many of the new jobs SMEs create are higher skilled and higher paid. SMEs, therefore, are exceptionally important to the UK economy and job creation.
“Many SMEs across the UK are profoundly concerned about how they will cope with the outcome of the vote. Consequently, they are cancelling or delaying investment decisions. One recent survey suggested as many as 40% of medium term SME investment decisions have been adversely affected by the Referendum. This is very damaging at a time when overall UK business investment is already indecline.
“They are worried that the UK’s recovery will stall for a lengthy period whichever way the result goes. And they recognise the self-fulfilling aspect to all this. Because many SMEs are holding back now on investing and expanding, behaviour driven by short term uncertainty about the Referendum, economic growth is likely as a result to be moderated in the months ahead, threatening the recovery.
“SMEs which import and/or export are anxious about what terms of global trade will exist after the Referendum and how well equipped they are to deal with any changes. This is further undermining SME confidence in UK international trade arrangements. As the recently published YouGov study of UK SMEs, commissioned by The Business Growth Foundation points out more than 50% of UK SMEs already believe their interests are not sufficiently considered in UK international trade policies.
“To compound matters some SMEs exporters into the Single Market are reporting that their EU customers are securing alternative suppliers as an insurance against Brexit and are unlikely to reverse their decisions irrespective of the vote.
“We ignore these profound concerns at our peril. Our SMEs deserve more of our care and attention right now and in the period after the Referendum.
“Big corporations have the resources to deal with any of the scenarios that might arrive after June 24th. They also have excellent channels into politicians and regulators and can more easily speak with a united voice about issues common to their large companies.
“SMEs are not in this position, are by definition a much more complicated and diverse constituency, and need more outside help whether the vote is for Remain or Brexit.
“This is why The Business Growth Foundation is calling for the Government to establish a SME Task Force, Chaired by a leading figure in the SME economy and including a Secretary of State along with senior representatives of business membership organisations.
“The terms of reference will be to assess the implications for UK SMEs of the Referendum vote and to fund measures that will assist SMEs to manage the post Referendum world, whether that be within specific sectors and/or more generally.
“The creation of the Task Force will, as an act in itself, be an important and overdue recognition of just how pivotal SMES are to the UK economy.
“The actual work of the Task Force will be a critical and prudent investment for the long term benefit of our economy.”
Iain Hasdell is the Chief Executive of The Business Growth Foundation
The Business Growth Foundation is a new, independent, not-for-profit think tank, which aims to push the economic and political agenda of the SME sector, which represents 99% of the UK economy.
The organisation exists to help to make the UK the best place in the world for creating and growing successful small and medium sized businesses.
This Business Growth Foundation has been established to support the SME sector by pushing its agenda and providing research to support its future success as a key player in the UK economy.