Brexit ‘will hit innovative SMEs the hardest’
INNOVATIVE small- and medium-sized enterprises (SMEs) that are the high-growth “superstars” of tomorrow could be the most negatively affected by Brexit, a study has warned.
The research from the University of St Andrews, released on Monday, found Brexit is likely to result in lower levels of capital investment, growth, product development and business internationalisation, as well as reduced access to external finance.
Future plans for capital investment within innovative UK SMEs seem particularly likely to be negatively impacted.
Ross Brown, reader in entrepreneurship and small business finance at the University of St Andrews, warned that reduced capital investment could critically weaken and undermine the ability of SMEs to grow and prosper.
“Most worryingly, these perceived negative impacts appear to be foremost in the minds of entrepreneurs and managers located in the types of innovative and export-oriented companies, which are often viewed as the high-growth ‘superstars’ of tomorrow,” he said.
The research, which draws on econometric analysis of the UK government’s longitudinal small business survey, shows concerns about Brexit are not felt uniformly across SMEs.
Brexit-related uncertainty is likely to affect larger, export-oriented firms and those operating in the innovative hi-tech and service-related industries the most.
SMEs based in Scotland and Northern Ireland view Brexit more negatively than their counterparts in England and Wales. The study said this mirrors the voting patterns during the referendum but may also reflect the greater reliance on EU trade within Northern Irish SMEs.
“Owing to its highly complex, contested and indeterminate nature, Brexit is unlike most other types of institutional instability because it has the potential to fundamentally re-write the rulebook for how firms do business in the UK,” added Brown.