As an entrepreneur, you know that any political or legislative change will have an impact on your business. Brexit is a massive event that will affect the manner in which small businesses are operated. Here are a few of the most important effects you’ll have to keep in mind over the coming years.
Businesses Still Abide by EU Rules
While the transition period is lasting, businesses in the UK will have to abide by EU regulations and wait for new rules to be agreed upon. It’s still not clear what trade relationships companies in Britain will enjoy with partners in the EU.
Needless to say, uncertainties about the single market and free movement of people are having a negative impact on companies. Organisations like the Federation of Small Businesses (FSB) are calling for more clarity and rapid measures that will deal with the unrest in the business community.
A quarter of FSB members export goods and services to foreign markets. The majority of these small businesses have partnerships in the European Union. The free market gives access to over 500 million potential customers and its value is estimated at 11 trillion euro. Changes in the current arrangements could have a seriously negative effect on small and medium-sized companies.
What will Change?
Some are optimistic that leaving the EU would signify red tape reduction, market deregulation and more freedom for small businesses. These are some of the main reasons why supporters of Brexit voted for leaving the European Union.
On the other hand, immigration restrictions competitiveness of smaller companies. Access to affordable labour is of paramount importance for startups and small businesses in the UK. It has already become evident that certain sectors will be experiencing labour shortages as the number of EU citizens coming to the UK decreases.
According to ONS data for early 2017, there are 748,000 national job vacancies. At the same time, companies are complaining about a difficulty finding suitable candidates for the positions due to a shortage in qualified workers. If many positions remain unfilled, the growth of small and medium-sized companies in the UK could be curbed.
A survey carried out among 1,000 employers suggests that more than a quarter of company owners believe that EU nationals they currently employ will leave their job and potentially leave the UK, as well.
The good news is that in the weeks after the announcement of Brexit, the number of registered new businesses by Europeans went up. Some are interpreting such data to mean that a UK free from EU regulations could eventually become more attractive to foreign investors.
The Good News
There may be some additional good news for small business owners in a post-Brexit world.
For a start, the British currency saw a sharp value reduction in the months after the announcement of Brexit. This has had a greatly positive effect on the tourism sector. Not only is it driving foreign tourists to the UK, it’s also keeping local tourists in the country.
There’s also an argument for a bigger number of skilled workers coming to the country. Brexit will potentially expand the entry of immigrants from non-EU countries like India and the US. The influx of such professionals will lead to positive market developments. There’s even an idea for the introduction of a point-based immigration system that will drive top talent to the country.
Some predictions focus on positive developments in the real estate sector, as well. It’s still too early to draw general conclusions about the years to come. The legislative measures that the government will introduce are the biggest determining factor for the fate of small companies in a post-Brexit UK.
About the Author
Article 1 is a London based law firm specialising in UK immigration law and related human rights and EU freedom of movement law.