And so it begins. Article 50 was triggered by the Prime Minister and the two years of negotiations with the EU have begun, albeit unceremoniously with early jabs from either side on where their respective red lines are and even a little early sabre rattling concerning historical disputes such as the future of Gibraltar.
The PM has even said that “No deal is better than a bad deal”. We wonder how our clients feel about that? And of course that leads us to the question about what plans our clients may start putting in place? How they have faired since the decision to leave was originally taken?
Little impact on small businesses so far
As far as we can tell and also from the results of numerous surveys taken last year, including one from Company Check, over 50% of small businesses have said that there’s been no impact on them, 30% had reported a negative impact largely due to the uncertainty Brexit has caused, and 15% said they have experienced a positive effect.
Another report from Opus Energy claims that many SMEs are unfettered by the Brexit result, with 29% of the 500 SMEs it surveyed reporting they were more confident about their business outlook than they were before the decision to leave was made. Only 20% felt less confident. These results do reflect the great British spirit we often talk about: “From adversity comes opportunity”.
Whether you are a Brexiteer or a Remainer, the die is cast and it’s time to get on with business. We believe that Brexit should be viewed as a form of ‘Creative Disruption’, seen as not just a significant challenge for many companies, but also a sizeable opportunity too. The UK is still the world’s fifth or sixth biggest economy, depending on how you look at the value of the pound. We are a strong nation with a limitless desire to succeed and it would be foolish to believe that the UK need be entirely dependent on EU trade agreements. Can we expect pain? No doubt. But often, businesses that are very comfortable in what they are doing – “making hay while the sun shines”, as the saying goes, can become complacent and end up an industry laggard rather than a leader.
Start Planning For Change
So, for many businesses, maybe this is a wake-up call. Start planning for change, because ready or not, it is coming.
How do you plan? The first potential impact is staff. A lot of companies have become used to employing people from other countries in the EU. We have taken for granted the Italian Chefs, the Romanian fruit and veg pickers and the Polish builders. But, in recent months over 50,000 EU nationals have left the UK. Is this the beginning of a ground swell of people voting with their feet? It’s too early to say, especially there are many EU nationals in non-seasonal or cyclic work have invested personally in this country, much in the same was as those Brits who now live and work in other European countries.
Have you spoken to your EU staff? Have some open discussions and see how they feel. Many may be permanent resident holders and not so inclined to move.
What plans can you put in place to offset the potential loss of staff with training for local employees instead? Consider new apprentice schemes for instance.
Are you overly reliant on the EU for raw materials? Are there alternatives you could explore?
Manufacturers in the UK are some of the businesses that are most optimistic, with over 73% reporting as such in a report by Albion Ventures. IT and Telecoms are next at 65%, with retail SME at 53%. A weaker pound has it’s upsides for these companies, as it makes our products cheap in comparison, as long as labour and raw materials are sourced competitively.
Seize the day while you still can and get planning
So, our advice is to look very closely at your business operations and it potential vulnerabilities. Conduct what the banking world calls ‘stress tests’, by analysing ‘what if’ scenarios and exploring the potential for new, non-EU, partnerships.
You have plenty of time, two years in fact.