Article 50 will be triggered this week over nine months after the Brexit vote. The result has divided business opinion and opened-up debate about the future of Britain’s economy and international trade.
A report published in the run up to the Prime Minster officially starting the process has revealed that almost a third of small businesses exporting to the EU expect to export less in the wake of Brexit.
The new research by the Federation of Small Businesses (FSB) also claims one in five UK SMEs that currently have supply chains in the single market will consider moving more, or all, of their business into the EU.
Outlining her 12-point plan for Brexit in January Theresa May commented that a “bold” and “ambitious” free trade agreement would be pursued with the European Union. She confirmed that the UK won’t be a member of the single market and stated “It is time for Britain to get out into the world and rediscover its role as a great, global, trading nation.” She said that Britain needs to take the opportunity to increase trade significantly with fast growing markets.
Concern about the potential impact of tariffs being introduced to UK-EU trade ranked relatively highly in the FSB survey with one in four (27%) exporting small firms saying they would be genuinely deterred from trading with the EU should any tariff – no matter how low – be introduced.
The report, ‘Keep Trade Easy: what small firms want from Brexit’ shows the top priority market for small firms is still the EU single market (63%). It also reveals the importance of other markets, with nearly half (49%) of FSB members selecting the US as a priority market and one in three (29%) choosing Australia. Other key markets include China (28%) and Canada (23%).
Mike Cherry, FSB National Chairman, said:
“This new FSB research reveals the true small business wish list for future trade deals. Small firms trade with countries based on ease, cost and value and any future trade deal must deliver on these key aspects both with the EU single market and non-EU markets.
“The top non-EU countries of choice for trade deals include the US and China. However, the reality is that the EU single market is still a crucial market for smaller firms and cannot be undervalued. Compared to larger companies, small businesses typically work to tighter margins with limited resources, meaning changes to the trading landscape will hit them disproportionately hard. We call on the Government to ensure that a sensible phased implementation arrangement is put in place to avoid a cliff edge, once we have left the EU.”
Britain’s two-year withdrawal from the European Union will begin on Wednesday when Theresa May will announce to Parliament that Article 50 has been triggered.
Head of Businesscomparison.com, Philip Brennan comments:
“Only the future will tell us if this is the right time for the country to action Article 50. Whatever happens over the next two years it is going to be interesting to see how this unfolds. UK businesses should be at the forefront of the UK’s policies as a successful independent economy will be more important than ever.
“It is positive that businesses are looking for wider opportunities because of Brexit, however we need to be aware that the logistics of working with countries further away will never as be as easy as working with our European neighbours. The aim of Brexit was to help British businesses and the statistics show that a competitive trade agreement is the main priority for SMEs in the UK. It is important that they still have access to their largest market for both imports and exports without restrictions.”