Boost Capital helps small business across the UK by providing funding across a multitude of industries. With the EU referendum fast approaching, we wanted to provide a simple, and easy-to-understand guide for all small businesses out there.
BREXIT OR BREMAIN
What does the EU referendum really mean for UK SMEs?
The Brexit vote is fast approaching and small businesses need some answers out of all the scare stories arising from both sides. Here we demystify some of the issues, exploring how either outcome will impact your business.
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Brexit opinions amongst UK SMEs
We can see in the infographics above that small business owners are almost equally divided between whether to vote ‘In’ or ‘Out’…
Brexit industry divisions
OUT 32% vs. IN 68%
OUT 57% vs. IN 29%
OUT 55% vs. IN 34%
OUT 37% vs. IN 44%
OUT 39% vs. IN 36%
OUT 35% vs. IN 59%
Brexit and your small business: pros & cons
Key fact: 10% of the total construction workforce was born outside of the UK
Pro: Reduction in EU-regulation ‘red-tape’ may be appealing to small construction firms. For example, the Energy Performance in Buildings Directive (EPBD), can be costly for construction. This directive states that all construction projects must be near carbon zero by 2020.
Con: EU migrants have provided construction SMEs with a reliable pool of highly skilled tradesmen. Access to this resource would be diminished in the event of Brexit.
Key fact: The franchise industry in the UK is worth £15 billion per year.
Pro: Exiting the EU will mean that many UK franchises could benefit from reduced costs if they are freed from EU regulations.
Con: The franchise sector is extremely strong in the UK with 97% of franchisee-owned units reporting profitability according to the BFA. Leaving the EU will undoubtedly create a period of uncertainty, slowing economic momentum.
Key fact: Migrant workers make up over two thirds of the hospitality workforce in London.
Pro: A weaker pound (if this scenario plays out) could mean an influx of tourists, increasing trade for the hospitality industry in the UK tourist hotspots.
Con: With the hospitality industry’s huge reliance on the migrant workforce, Brexit could mean a deficit in the supply of flexible and suitable staff.
Key fact: Approximately one half of all UK exports currently go to the EU.
Pro: If the pound is weakened after a Brexit, this would be favourable for wholesalers exporting abroad.
Key fact: Importing goods from other EU countries currently has a tariff of 0 and on average a 5.3% from other countries.
Pro: The UK could implement a free trade agreement with reduced tariffs on goods. Non-tariff barriers on goods would remain greater than if staying in the EU.
Con: Leaving the EU would mean losing out on EU trade agreements. It’ll likely cause an increase in VAT tax negatively impacting small retail businesses.
Key fact: Over 90% of the UK trade is handled by ports, with the EU remaining our largest trade partner to date.
Pro: Pro campaigners argue that UK aviation and rail will be unaffected by a Brexit. The aviation sector will likely remain part of the ECAA, whilst UK rail operators are likely to retain the ability to participate in tender procedures for rail franchises in the EU.
Con: The shipping industry is likely to suffer by losing the right to carry goods across borders without taxes or duties within the EU. In addition, large amounts of investment from other EU countries into the UK transport industry will be at risk.