Insurance · 2 November 2017

Majority of small firms will prefer trading with Europe even after Brexit

euro
18 per cent of small business “Leave” voters would change their minds in a second vote

The majority of small UK businesses currently trading with Europe will continue to do so after Brexit, regardless of the outcome of diplomatic negotiations, new research has found.

As many as 88 per cent of small business owners currently trading with Europe will carry on doing so after Britain leaves the EU, despite the potential for additional bureaucracy and rising costs.

In a survey conducted by accountancy firm Russell Smith amongst hundreds of British firms currently trading overseas, just five per cent said they would look to step up efforts to trade more intercontinentally after Brexit, to markets such as the US or China.

Of the 12 per cent of small business owners that said they would look to change their international trading relationships as a result of Brexit, seven per cent admitted they would move their business back to the UK.

Further intercontinental trading, with the likes of the US or China, can therefore be considered the least favourable option amongst small UK exporters and importers.

The statistics are a snub to pro-leave campaigners at last year’s EU referendum, who claimed Britain’s exit from the EU would open the way for closer trading partnerships with countries further afield.

Better transatlantic and Pacific trade agreements were hailed as natural successors to Britain’s EU departure, but as yet no new trade agreements have been signed, whilst the UK’s trading relationship with the EU is currently in disarray.

Director at the company, Russell Smith, said he was surprised by the survey results. “What this survey demonstrates is a real disconnect from the campaigns of Brexit and the mindset of our country’s small business owners,” he said.

“There was a lot of chatter about trade with the US, China, Japan, Canada and Australia in the run-up to Brexit, and even more so now. Yet, despite this, SMEs are much more focused on keeping their EU trade arrangements intact.”

Some 80 per cent of the survey’s respondents said that as negotiations with the EU continue, they’d support a freedom of movement agreement similar to that in place with Norway.

The study also found that 18 per cent of small business owners who voted Leave in last year’s referendum would change their minds in the event of a second referendum, while just eight per cent of “Remainers” would vote the other way.

The vast majority of small business owners feel they weren’t given enough information about the true impact of Brexit on the economy in the build-up top the referendum. Only two per cent of respondents said they were satisfied with the information the government gave.

“Even with the increased cost of trading, maintaining relationships with EU member states in a post-Brexit landscape has its appeal to British businesses, Smith went on to say.

“Whether out of loyalty, ease of access, current levels of satisfaction or apprehension of investing resources in finding new trading partners, it’s clear that the SME trading landscape in the UK will remain very Euro-centric even after we officially leave the E.”

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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