According to research from the Federation of Small Businesses (FSB), a trade deal with Europe is the top priority for SMEs following Brexit.
A survey was conducted on 1,758 members. 63% of exporters said that a deal with Europe should be prioritised before deals with the US, China and Australia.
Mike Cherry, FSB National Chairman says: “This new FSB research reveals the true small business wish list for future trade deals. Small firms trade with countries based on ease, cost and value and any future trade deal must deliver on these key aspects both with the EU single market and non-EU markets.”
Currently, 92% of exporters and 85% of importers trade with the EU. Exporters are twice as likely to begin trading with the EU as their first foreign market to trade with. 58% said that it’s easier to trade with the EU than non-EU countries, while only 6% find it more difficult.
The potential impact of tariffs
Small businesses are concerned about tariffs that may be imposed after the UK leaves the single market. 76% of potential exporters say they expect tariffs to play an important role in their future business plans.
34% of exporting companies said that they would be put off from trading with the EU if a tariff of between 2-4% was applied, which is the EU’s average range under the World Trade Organisation.
39% of companies that trade exclusively within the EU, (21% of those in the survey) said that any tariff rate above 0% would be enough to put them off trading.
“The impact of potential tariffs and non-tariff barriers to trade with the EU is shown to be a real concern for small businesses trading overseas, at the very time that the UK economy can least afford to see a slowdown in exports.
“FSB calls on the Government to secure the easiest and least costly access to the EU single market in the Brexit negotiations. This includes a new customs arrangement with the EU that allows for frictionless cross-border trade. And we call for greater support for small businesses to gain full benefits from future trade deals with non-EU markets,” says Mike Cherry.
Companies operating globally
One in five companies that operate globally are considering relocating more or all or their supply chain to the EU. On the other hand only 9% are considering a move to the UK.
However, the emergence of newer markets outside the EU is growing in popularity. 19% of exporters trade with at least one of the main four emerging markets, India, China, South Africa and United Arab Emirates.
People are already seeing successes from trading with these markets, sometimes more so than trading within the EU. The average turnover for smaller companies exporting to China is 1.5m. Whereas the average turnover for those who export to the EU is £893,203.
“The top non-EU countries of choice for trade deals include the US and China. However, the reality is that the EU single market is still a crucial market for smaller firms and cannot be undervalued. Compared to larger companies, small businesses typically work to tighter margins with limited resources, meaning changes to the trading landscape will hit them disproportionately hard. We call on the Government to ensure that a sensible phased implementation arrangement is put in place to avoid a cliff edge, once we have left the EU,” Cherry added.
What are your top concerns following our exit from the EU? Will you be looking to outside the EU? Please leave your thoughts in the comments section!
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About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.