Frederick Achom looks at how the Brexit delay is affecting small businesses
Small businesses in the UK are showing signs of Brexit fatigue, according to research by the Telegraph. Its business trackers shows that , and the most commonly cited reason remains Brexit uncertainty.
The index analyses Tweets from 25,000 UK small businesses and entrepreneurs. After extracting marketing and neutral posts, it compiles the data to show how many businesses are showing signs of strain or positivity.
Government delay continues
There have been no further votes in Parliament regarding Brexit since 10 April, which has left the UK enduring a level of sustained uncertainty. As the path to leave the EU remains unclear, businesses have been sharing their opinions online.
The most recent results from Business Tracker concern Tweets from 25,000 small British businesses, start-up owners and entrepreneurs that were published between 26 March 2019 and 22 April 2019. As this is the immediate aftermath of the decision for a Brexit extension being taken by the Government, it has yielded particularly relevant data.
Overall, the tracker shows around 64% expressing pessimistic sentiments, and 35% remaining generally positive. Measured against 2018’s results, there has been a significant increase in pessimistic Tweets on a month-to-month basis. There are around 19% more negative Tweets from the representative sample of businesses compared with the same time period last year.
However, not all of the negative posts are directly concerned with Brexit. Just over half of the negative posts specifically point to Brexit as the cause for their flagging morale. So, while it isn’t the biggest concern for every business, it’s the biggest for a significant number. More than half are worried for their business’ future given the seeming lack of progress in negotiations. More than 11% are worried that the UK may still leave the EU with no deal at all.
Confidence measuring index
The Federation of Small Businesses (FSB) runs its own confidence measuring index (SBI). And the most recent data from the index concurs with the Telegraph’s findings. It shows almost 90% of small businesses completely ceasing to recruit new staff, and 12% actively reducing their workforce.
Out of the small businesses that rely on European exports for trade, expectations are the lowest in the eight-year history of the index. Just over 25% of SMEs that rely on trading overseas expect to see their exports rise during Q2+3 2019, compared with 42% last year.
Around 68% of small business say that international sales are either declining or failing to rise, up 3% since Q1 2018. And looking ahead to the near future, under 40% expect to see revenue rising, a fall of 45% from this time last year.
What the SME community can do
The SBI measures small business confidence at -5.0 for Q1 2018, compared with +6.0 from Q1 2018. Can Brexit be blamed for the sharp drop? Mike Cherry, Chairman of the FSB believes so. He says: “Small firms… have suffered 1000 days of uncertainty since the Brexit referendum, leaving us unable to plan, invest and grow.”
As a community of small businesses, entrepreneurs and investors, we must accept that, for now, the position remains uncertain. Starting from this basis, we must find ways to remain resilient and continue our contribution to the UK economy. The Brexit transition period is particularly difficult for the SME community, as they are lighter on resources and less likely to weather cashflow storms.
Some small businesses that rely on European trade are simply refocusing on different regions, such as the US and Asia. By transferring business operations to countries outside of the EU, they can retain some balance and remain in business.
We also shouldn’t ignore the positives showing in the economy nationally. We have decreasing levels of unemployment, for example, with 32.7 million currently in work. Additionally, data shows that small businesses outside of London are finding positives in the support they are receiving. About 12% of the Tweets in the Telegraph’s business tracker are enthusiastically positive about the high levels of support available to UK SMEs. This is where we can find the positive of the current situation and continue working towards a brighter future.