Brexit is preventing one in five (19%) UK SMEs from growing as they would like this year, according to new research.
The pan-European study, commissioned by conference call provider PowWowNow, found that established SMEs with at least 50 employees are most affected by the prospect of Brexit, with a third (36%) citing the prospect of the UK’s exit from the EU as the number one challenge preventing them from scaling-up. Startups are also being adversely affected, with 20 per cent viewing Brexit as their principal challenge when looking to scale up.
The survey found that a third of UK businesses believe Brexit is also a major barrier to accessing the capital they require in order to grow, with 33 per cent of UK SMEs viewing Brexit as their primary challenge when it comes to accessing investment. Of these businesses, established SMEs are feeling the impact of Brexit most when it comes to attaining financing, with almost half (45%) saying that the UK’s exit from the EU is the main obstacle stopping them from gaining the capital needed to grow.
Interestingly, our European neighbours are feeling less impacted by the prospect of Brexit, with just five per cent of German SMEs perceiving Brexit as a threat to scaling, while only one in ten (10%) small businesses see Brexit as a barrier to accessing capital.
While Brexit has historically been perceived as an issue for French businesses looking to grow, with just over one in ten (12%) regarding Brexit as a barrier to scaling in the past, fewer businesses (just 5%) now view it as a challenge today. Just one in ten (11%) French SMEs cite Brexit as a barrier to accessing the capital required to scale.
However, the situation is vastly different in France for bigger SMEs. Established SMEs with between 50 and 99 employees see Brexit as a much more significant threat; nearly a third (30%) believe the UK’s exit from the EU would be a primary concern when accessing capital for growth.
Jason Downes, MD of PowWowNow, commented on the findings: “The fact that a staggering one in five UK SMEs find Brexit is preventing them from scaling highlights the detrimental impact the current political crisis is having on UK productivity. British innovators are less likely to receive the funding they require to get their ideas off the ground, while established SMEs are finding their growth stunted by financial uncertainty.
“Businesses must look at ways they can cut costs and minimise overheads in order to bolster profit margins and boost turnover. Taking advantage of technology to facilitate remote working arrangements can help reduce the need for costly fixed office spaces and open up opportunities for attracting better talent from further afield. That way, firms can begin to Brexit-proof themselves against adverse conditions.”