Brexit may prove to be a major obstacle to over a million small and medium-sized enterprises, say scientists who conducted one of the largest surveys of its kind in the UK.
Researchers from University of St Andrews and University of Essex found that almost a quarter of small and medium-sized enterprises (SMEs) surveyed in 2017 viewed Brexit as a major obstacle to their success, up from 16 per cent in 2016.
The activities most affected are investment and exporting, according to the study published in the journal Regional Studies.
Plans for future capital investment have been scaled down by around two-thirds of SMEs (62 per cent) and plans to increase export sales are being scaled back by over three-quarters (77 per cent).
The data from the research covers a total of 15,867 responses from UK small business owners and managers, taken during a major longitudinal survey.
Extrapolating the number of businesses surveyed to the overall population of SMEs suggests that over 1.25 million SMEs have significant concerns regarding the potential impact of Brexit on business success, researchers said.
SMEs account for 99 per cent of all UK firms and 60 per cent of total private sector employment.
“SMEs represent a core part of the UK economy and are crucial for job creation, innovation and productivity growth,” said Ross Brown, from University of St Andrews.
“They are also disproportionately impacted by uncertainty and generally have a lower resilience to unexpected shocks. Our results suggest that Brexit-related concerns among them are escalating,” said Brown.
“Larger, internationally-oriented and knowledge-based SMEs are particularly concerned, as are those located in key urban and peripheral geographic areas,” he said.
Researchers examined the implications of their findings on policy issues including immigration and international trade.
“Worryingly, those most concerned — innovators and exporters — are the SMEs deemed most important for UK productivity growth. Yet to date, the UK government has paid scant regard towards assisting them to prepare for the disruptive effects of Brexit,” said Brown.
The single largest factor worrying SMEs is uncertainty regarding future regulatory change, with 74 per cent citing this as a concern.
The bulk of survey evidence suggests that for most SMEs, maintaining frictionless and borderless trade is crucial for their operations.
Source: financialexpress.com