THE PROSPECT of a no-deal Brexit is continuing to cause concern for small UK firms with 39 per cent believing that a no-deal scenario will negatively impact them.
However, just 21 per cent have planned or prepared for anticipated issues, a survey by the Federation of Small Businesses (FSB) has found.
Almost two thirds, 63 per cent, don’t think they are able to plan ahead of the proposed 31 October exit date.
In London, some 48 per cent of small firms believe that a no-deal scenario will negatively impact them and just six per cent believe it will have a positive impact on their business.
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“Ongoing uncertainty is to blame for preparations hitting the skids with the picture still not clear as to how the UK will leave the EU on 31 October,” said Michael Lassman, London regional chair of the FSB,
The average cost of preparing for a no-deal Brexit is around £2,000, according to the FSB survey, with the average cost rising to £3,000 for smaller businesses that import and export goods.
Just under one third, 31 per cent, of prepared small businesses have stockpiled ahead of the planned exit date. A further 34 per cent have reported temporarily or permanently reduced profitability.
Volatility in the value of sterling is also creating issues for some firms with 46 per cent stating it has negatively impacted their businesses. And 46 per cent of small businesses believing they will be negatively impacted by a no-deal scenario would welcome some form of financial support, the FSB survey said.
“Preparing for this outcome is coming at a high price though with small firms being hit by an unstable pound and having to shell out money on a potential outcome that has been highly disruptive, remains uncertain and is unwanted,” Lassman said. “Government must use what little time is left before 31 October to provide small firms with the support they need to navigate the unchartered and turbulent waters of a no-deal Brexit.”
Lassman suggested that financial assistance such as vouchers worth up to £3,000 could be provided to assist firms with preparing for a no-deal Brexit.
He also suggested that the government could implement wide-reaching measures in an early budget with an aim to boost small business cash flow, including a temporary reduction in VAT.
Other suggestions include an uprating of the employment allowance, an expansion of HMRC time to pay arrangements, and extending the two year ‘retailers’ business rates discount of 33 per cent to a wider range of smaller businesses.
“Raising awareness is important, but not enough. The government must also turn to meaningful financial support,” Lassman said. “This is desperately needed and would certainly provide a much needed shot in the arm for those firms that have already spent money preparing.”