Here we are again, delayed Brexit – but have you taken the time to consider how a Brexit delay affects UK business? Not a lot of micro or small businesses have (unless of course, you deal directly with Europe as part of your operation). According to the North East Chamber of Commerce, 42% of businesses have not yet carried out any impact assessment on Brexit. Certainly, the temperature within the small and micro business community is that “we’ll just handle whatever comes our way” however in the larger businesses, the confusion over Brexit is contributing towards a major headache around contingency. Many medium to large organisations decided to borrow money to stockpile raw materials during the previous delay – leaving them little cashflow to operate. This newly delayed Brexit can surely only compound the issues these organisations are facing as EU customers hold back projects potentially leaving the order pipeline dry.
On a very direct level, Dominic Raab is quoted as saying that a delayed Brexit will cost the UK £1bn per month, but when factors such as EU grants to support farmers or regional development are taken into consideration – the figure is more probably around £774m per month. That’s still a lot of money that the UK is paying out because of the Brexit confusion.
The cost to UK business has been monumental in terms of lost productivity (between 2% & 5%) but also covers areas such as:
- Investment (down 11%)
- Recruitment & retention (67% are struggling to fill vacancies)
- Growth & Development (net loss of between 1.5% and 3.9% GDP)
Many businesses state that funds which ordinarily would have been used to support productivity, growth and recruitment simply haven’t materialised as companies scramble to develop plans for a no-deal Brexit. Between November 2018 and January 2019, 10% of CFOs and 6% of CEOs reported spending six hours or more a week on Brexit preparations.
As an example, one of the most productive plants in Europe and certainly the UK Nissan, in Sunderland, have been reducing productivity levels and just this year reversed the decision to build the new X-Trail at the Sunderland plant and have decided not to build the Q30 and the Q30X models.
So, while Brexit is having all kinds of effects on businesses, there are still opportunities to explore. For our economist friends reading this, there are probably huge opportunities to gain contracts working with large organisations or the UK Government using your skills and knowledge to support and advise. More widely, there is the expectation that job losses will occur due to Brexit – so if you’re already supporting businesses, there may be a market to support people to start their own business, develop training materials to sub-contract your specialisms or maybe even think about expanding your own business?
As the currency exchange hits points that haven’t been seen in a couple of decades – other nations are finding the Pound attractive and PayPal has recently announced that SME’s from the UK who export globally have seen sales increase – great news indeed! There are huge opportunities with the likes of New Zealand, who already have trade agreements worth £3bn and potentially China who the UK could exploit in an export market.