International Trade

Brexit is a mixed bag for SMEs

3 min read

26 July 2018

UK exporters are enjoying the benefits of Brexit but still have a "fear factor" about cracking new markets outside of the EU.

OCO Consulting’s Global SME Brexit study found that out of 1,000 SMEs a third had felt a positive impact from Brexit, with 32% reporting improvements since the EU referendum. Only 24% said they had experienced a negative impact.

Over a third of SMEs – 37% – said they had attracted new customers and contracts since the Brexit vote, while 36% have managed to increase sales with existing customers.

When the figures are stripped down to look at SMEs who are already exporters or have overseas operations then 43% stated they had experienced a positive business impact.

They have been boosted by the deflated pound, which saw its value fall drastically following the 2016 referendum and has made for competitive prices which have attracted overseas investment.

Just under two-fifths (39%), expect their exports to increase following Brexit. The report said that this showed “that while the UK is set to leave the EU, continued access to the single market will continue to be the backbone to the ambitions of many UK SMEs”.

Over the past five years, 44% of UK SMEs considered expanding into Europe, dwarfing the other regions available, including the US, which was on a distant 19%. For the next 5 years 35% favour expansion into Europe but declines are also predicted for the US and Asia.

“The UK Government is clearly planning to secure deals around the world and for ‘UK Plc’ to export to new international markets. However, Europe is, and will continue to be the most significant market for SMEs by a long way, and so a deal with the EU, that is good for both exporters and importers and goods and services is of the utmost importance,” said Gareth Hagan, director at OCO Global.

“The challenge of encouraging SMEs to seek opportunities further afield is one that also persists, and ultimately needs to be overcome. We observe something of a ‘fear factor’ amongst both existing and aspiring exporters in many international markets. Alongside the oft-stated intent to strike free trade agreements, and transform trading volumes outside EU, the Government and industry have an important role to play in developing appropriate channels and support mechanisms that encourage SMEs to consider markets that they may have ignored in the past.”

Other findings revealed that positive vibes varied significantly based on size of company, with 46% of the smallest SMEs feeling positive primarily as they believe more agile firms will be able to gain market share after Brexit.

London is the most optimistic city with half of all companies polled being positive about the future, which is more than double that of many other UK regions.