In case you’ve been living under a rock or have chosen to avoid the ongoing lobbying between the various sides, ‘Brexit’ refers to the pending referendum on the UK’s current membership to the European Union. Many political bodies including the Conservatives are backing the referendum which is due to be concluded by the end of 2017 but there are also a great deal of contesters. Understandably this period of flux and uncertainty is causing disruption in Britain but the country’s SMEs appear to be blissfully unaffected.
A majority of British SMEs unfazed by Brexit
The general election and the recent Scottish referendum have caused a widespread sense of instability and unease for small and medium-sized business owners across the country and a potential Brexit is doing nothing to settle it. However, figures released today during the annual Telegraph Festival of Business have shown that UK SMEs seem to be largely unfazed by the continuous political tug of war.
The tell-tale figures were obtained following research carried out by YouGov on behalf of EasyJet, who were one of the sponsors of today’s highly-anticipated event in the capital. The study involved 1,000 small and medium-sized enterprises which were surveyed in a bid to gain more insight into how the upcoming EU referendum might be impacting their forward planning.
The research revealed that a vast 70% of those polled believed that the UK’s membership to the European Union was not standing in the way of their plans for the future whatsoever. Just 8% showed any signs that the potential Brexit might be having a ‘major’ effect on their plans and a modest 18% admitted to a ‘minor’ impact. The country’s SMEs are so unfazed by the referendum, in fact, that more than half admit to even being unaware of the criteria Britain needs to meet in order to remain part of the EU. Less than half believe that they possess “all the facts to make an informed decision on Britain’s place in Europe.”
British SMEs still relying heavily on European trade
Earlier this month, UK-based foreign exchange company, World First also released figures that demonstrate the ongoing dependence British SMEs have on European trade despite the pending Brexit referendum. This inclination is so strong in fact, that an excess of £198m was transacted in euros during October, which is a 59% increase on the previous month. Both Europe and China have witnessed a hike in trade with UK SMEs over the past year but euro-based transactions proved to be more than 22 times the value of GDP sold into yuan.
The European Union has since been described as “the cornerstone of UK SME trade” as micro-enterprises up and down the country remain faithful to the union despite Britain’s potential exit. Chief economist at World First, Jeremy Cook explains that although China is becoming an increasingly significant trading destination for British SMEs, Europe still appears to be the preferred location.
He said: “Clients of World First send 22 times as much money to Europe in October as they did to China with one third of out transactions this year being clients selling sterling to purchase the European single currency.
“It’s clear that any decision to revaluate Britain’s relationship with the EU needs to be carefully considered given the volume of trade being conducted and perhaps more crucially, the continued growth trajectory of this.”
He added: “What is clear however, is that with volatility present in both markets, UK SMEs must be aware of their FX exposure and manage this effectively in order to prevent currency fluctuations impacting the bottom line.”
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