More Small UK Companies See Brexit as Bad for Business

An activist poses with his face painted in the EU and Union Flag colors during an anti-Brexit campaign stunt outside EU headquarters during an EU summit in Brussels, Thursday, March 21, 2019. (AP Photo/Frank Augstein)

(CN) – The logistics of the United Kingdom’s impending divorce from the European Union have been thorny and contentious, leaving the entire process mired in uncertainty. That uncertainty, coupled with the eventual uncoupling from the EU’s customs union, has many British businesses worried about the impact of Brexit on their livelihoods.

According to a study published Friday in the journal Regional Studies, 23 percent of small and medium U.K. businesses – referred to as SMEs in Europe – see Brexit as a “major obstacle” to the success of their business. While the percentage may seem small, consider this: SMEs account for 99 percent of all U.K. firms and 60 percent of private-sector jobs.

In other words, over a million small- and medium-sized businesses see Brexit as a major obstacle to their success.

Study authors Ross Brown and John Wilson from the Centre for Responsible Banking & Finance at the University of St. Andrews and Jose Liñares-Zegarra with the University of Essex noted that in 2016, immediately after British citizens voted to leave the European Union, only 15.4 percent of SMEs thought Brexit was a major obstacle.

The authors used the Longitudinal Small Business Survey which is compiled by the U.K. Department for Business Energy and Industrial Strategy. The survey, which has been conducted over the last decade, asks 15,500 small and medium sized business owners about business growth and performance.

“SMEs are also disproportionately impacted by uncertainty and generally have a lower resilience to unexpected shocks,” Brown said in a statement. “Our results suggest that Brexit-related concerns among them are escalating. Larger, internationally-oriented and knowledge-based SMEs are particularly concerned, as are those located in key urban and peripheral geographic areas.”

Brown isn’t the only one expressing concern about the impact of Brexit on SMEs.

Jean Lemierre, the chairman of the French retail bank BNP Paribas, told a conference at the French central bank this week that he has concerns about the preparedness of SMEs for Brexit.

“Large companies are ready, they have contingency plans, they have created stocks of pharmaceutical products and so forth. Mid-sized and small companies are not ready and (there) will be whatever happens a disruption for them,” he told the European Money and Finance Forum on the 20th anniversary of the introduction of the common currency, the euro.

The head of the British Chambers of Commerce, Adam Marshall, had even stronger words.

“We are angry. You have let business down,” he said at the group’s annual conference Thursday.

The Chambers of Commerce projects business investment overall will fall by 1 percent in Britain this year as a result of Brexit. The projection follows drops in business investment  for each quarter of 2018, the first time since the 2008 financial crisis.

U.K. lawmakers have until April 12 to approve the divorce terms negotiated by British Prime Minister Theresa May and EU leaders. A vote Friday failed 344-286, with the two sides saying the deal leaves the Britain either too closely aligned with the EU or not close enough.

As the European Commission noted in a statement following the vote Friday, time is running out for British lawmakers and a “no deal” scenario is now likely. As the name implies, a no-deal Brexit means Britain leaves the EU at midnight on April 12 with no agreement in place regarding what the future relationship between the EU and U.K. will look like.

Under a no-deal scenario, border checks could be reintroduced – violating 1998’s Good Friday Agreement which ended violence in Northern Ireland with the guarantee of open borders between it and Ireland, an EU member state. Transport and trade between the U.K. and EU would also be severely disrupted, as would communications.

“The EU will remain united,” the commission said in a statement after the vote. “The benefits of the withdrawal agreement, including a transition period, will in no circumstances be replicated in a ‘no-deal’ scenario. Sectoral mini-deals are not an option.”

Molly Quell reports for Courthouse News Service from The Hague, Netherlands.

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