Why loyalty to European partners might still matter post-Brexit
5 min read
15 October 2018
In light of Brexit, British SMEs must strike a balancing act between reassuring their European partners and looking to tap into global markets.
With the dawn of every Monday morning, we hear stories about Brexit, and what the impact of ever-developing decisions could have on the health of British businesses.
According to new research conducted for RSM, a global tax and consulting network, British businesses may be left out in the cold as Europe starts to look ahead to a US trade deal.
European businesses may look to the US over the UK
The research shows that an estimated 8% of European businesses have gone beyond the simply nervous stage – and have cut ties with British suppliers.
A big reason for this could be the heavy expenditure both EU and UK businesses are experiencing when trying to deal with the trade restrictions that are part of the Brexit process.
RSM found that 20% of businesses both sides of the channel have spent more than £10,000 trying to negotiate this stumbling block.
There is still hope for British businesses
Although the findings reveal that a number of European businesses are putting their anti-Brexit sentiment into practice, there is still some reluctance from the European business community over cutting ties with British businesses.
“Middle market businesses have often come through challenging periods to grow from a start-up to an established and thriving company. If trade barriers continue to increase, many of these businesses will need to draw from those experiences yet again.” – Jean Stephens, CEO, RSM
Whilst 23% of EU businesses favour heading towards a US trade deal, the same amount also wants to continue trading with the UK as a priority.
Remember the EU has two main trading partners
And one of them is the UK. Thus, EU officials have an obligation to ensure that they establish a solid trade deal with the UK as much as the US.
Despite all the sensationalist news articles and the blowing of hot air in Westminster, it would be diplomatic, and, economic suicide, if EU politicians involved in the Brexit process cut themselves off from trans-channel trade with Britain, as it would mean 50% of their main trading base would be gone.
What should UK SMEs be doing right now?
The first thing they should be doing is maintaining open, warm and honest connections with their European trading partners.
Business owners should remember that the Brexit process operates at a macro level (through politicians and their sentiment in government) and at the micro level.
The micro-element is most important for SME owners, as this includes how they conduct their business on a daily basis, including how they communicate with their European partners.
This should include being transparent about Brexit, including the uncertainties surrounding it.
“We are at a watershed moment in international trade; regulatory barriers and trade policy must be addressed so businesses can collaborate and compete globally.” – Gregor Schmidt, RSM
If all you can do as a British supplier to a European business is to reiterate your willingness to continue a solid trade relationship for as long as possible, then say it.
The world of business is built on shifting sands, and defined by the background of political and economic changes.
So remain vocal about your personal intentions as a British business trading in Europe, and remain open about ready to discuss any concerns your partners might have.
Keeping quiet will not help things, as uncertainty will only unnerve business partners and encourage them to cut ties with you.
Remember, there is evidence that despite the unpopularity of the Brexit decision in Europe, half of European businesses still want the UK to be a main trading partner with the EU.
– You must tap into this sentiment through good ambassadorship and open communications.
Look to global trading
Being in business is about growing, expanding and being innovative. Often it’s the big, and sometimes risky steps, that make a business reach new and exciting heights.
For some SMEs, Brexit could be the catalyst for their own growth and innovation. The climate may provide an opportunity for some businesses to take their sales perspective globally and enter new markets.
However, British business owners should maintain a balancing act, by looking ahead to global opportunities, whilst retaining European trade connections through good business practice and transparency.
– For all business owners worth their salt know that you need contingency plans in place whilst you pursue the more exciting and potential money-making ones.