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March 21 2017

Post-Brexit trade doubts weigh on small UK firms

Kathryn Gaw News, SME News Article 50, Brexit, EU Capital Markets Union, Federation of Small Businesses, Mike Cherry, SME finance, SME growth, SME trade, trade agreement

UNCERTAINTY over the UK’s new trade relationship with the EU is already causing “real issues for small businesses,” a report by the Federation of Small Businesses (FSB) has found.

With Article 50 set to be triggered in eight days, kicking off the UK’s long and arduous process of untangling itself from the bloc, the trade body said the expected net decline in overseas trade was already weighing on small firms’ confidence and future outlook.

Some small businesses have already seen an impact on their revenue generation and a number of firms are holding off making investment decisions until the uncertainty subsides, according to the FSB’s research.

The trade body commissioned independent research company Verve to survey 1,758 FSB members about their views between 27 October 2016 and 8 November 2016.

Small- and medium-sized enterprises’ (SMEs) access to finance could also be hindered by Brexit, the trade association warned.

Read more: SMEs missing out on business opportunities due to lack of finance

“In order to maintain the flow of financial services, it is clearly in the interests of both the UK and the EU to maintain ongoing cooperation between relevant authorities,” it said.

“One key example is the EU’s Capital Markets Union, which is seeking to enable the better matching of capital across European finance markets and, therefore, boost access to finance for small firms.

“Given the strength of the UK’s capital markets (just under half of the EU’s equity capital is already raised in the UK), mutual cooperation between the UK and the EU will be essential in achieving the successful implementation of such initiatives.”

Read more: No Bregrets – How P2P is dealing with Brexit

The research found that the EU single market is still the top priority market for 63 per cent of smaller firms and urged the government to ensure that a phased agreement is reached to avoid a “cliff edge” after Brexit.

“Compared to larger companies, small businesses typically work to tighter margins with limited resources, meaning changes to the trading landscape will hit them disproportionately hard,” said Mike Cherry, national chairman of the FSB.

“We call on the government to ensure that a sensible phased implementation arrangement is put in place to avoid a cliff edge, once we have left the EU.”

Read more: UK fintech investment falls amid Brexit concerns

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