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The Reality Of Brexit On UK Businesses

Brexit has been the zeitgeist of the past two and a half years, indiscriminately working its way into everyday conversations, newspapers and broadcasting. The exhausting amount of information and misinformation released daily has left the British population all but numb to updates and other opinions.

What isn’t up for debate, however, is the concern shared amongst business owners that the end result could harm current practices – and they have a right to be aware of what may affect them once exiting the EU.

Whatever your stance, to be led blindly isn’t being led at all. That’s why we wanted to share our understanding of the Brexit reality on UK businesses. Here’s our guide on the current outlook of the various outcomes from our exit of the European Union.

No-deal Brexit 

In July 2018, the British Chambers of Commerce (BCC) released a statement that time was running out to support businesses as we approach a possible ‘no deal’. At the time, BCC’s Director General Adam Marshall claimed that “businesses have every right to speak out when it is abundantly clear that the practical questions affecting the competitiveness of their firms and the livelihoods of millions of people remain unanswered.”

He went on to stress that “these are not ‘siren voices’ or special interests. They are practical, real-world concerns of businesses of every size and sector, in every part of the UK.”

Since this plea, little has been released. Businesses are choosing the continent or international markets elsewhere for their distribution hubs, and they are applying to European regulators by setting up legal identities. This isn’t to say that all businesses want to remain, just that the preference is a clear strategy.

With an extensive report on what businesses are actually saying about a no-deal Brexit, The Confederation of British Industry (CBI) estimated that only one in five businesses had implemented plans for this outcome. There are certain industries that have prepared ahead of time, like the pharmaceutical sector who not only stockpiled medicines but increased imports of key supplies by aircraft and opened additional ports.

Manufacturing and smaller businesses weren’t so forward-thinking. While car companies have already began to make their arrangements, SMEs remain in the dark. The Federation of Small Businesses estimated that just one in seven small companies was making contingency plans, and currently CBI requests for a ‘one-stop shop’ for Brexit business advice remain ignored.

Allie Renison, Head of EU and Trade Policy at the Institute of Directors, said attempts to prepare for a no-deal Brexit have been hindered by a lack of transparency from the government about its plans for all future possibilities.

Theresa May’s deal

Theresa on the Deal or No Deal

In direct contrast to a no-deal Brexit, businesses initially seemed generally in favour of Theresa May’s Brexit deal. While UK businesses are not as united as some polls had suggested they were, the CBI did express support of May’s strategy. While Carolyn Fairbairn, Director General of CBI, accepted that the deal was imperfect, she comforted businesses with three positives: an end to short-term uncertainty, the beginnings of a future trade deal, and that it was “the only viable option for getting beyond Brexit”.

Although, as the vote came closer, those not in favour of the deal were audibly critical of its lack of detail. According to a Harvard study produced in December 2018, UK businesses were very fragmented in their opinion of the deal. While it was accepted that some clarity was better than the current uncertainty, it was still difficult to swallow the continuing lack of detail surrounding our trading relationship with the continent.

It was the opinion of most companies surveyed that the deal was worse than the current opportunities presented by remaining in the EU. If that was not possible, then business leaders couldn’t accept the reality of having such a distant relationship with their EU counterparts. They instead preferred a closer affiliation which allowed the UK to participate in the European Single Market with flexible access to EU members’ skills and labour markets.

Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, expressed in December 2018 his opinion that May’s deal would have been good for the economy and that, by removing uncertainty, UK businesses could continue to develop. Since its historic defeat, May’s deal may seem unlikely to rear its head. However, in the short space of time between now and 29th March, it’s hard to imagine that a dramatic shift would take place allowing UK businesses to trade within the Single Market.

Second referendum

To ask the public to vote again on Brexit seems to be the most contentious issue surrounding the whole negotiation. Both sides feel at some capacity that whatever decision is made will somehow betray the democratic values of the UK, therefore leaving the possibility of a second vote largely ignored by Conservative and Labour leaders. That being said, we should consider from a business perspective how this would impact UK industry, if at all, should the decision ever occur.

Firstly, it wouldn’t get rid of uncertainty. So many business and political leaders have made the EU their platform for Britain’s place in the world, and it’s hard to imagine how it could snap back into where we were pre-2016. The indecision leading up to a second vote would further damage the markets, investors would again hesitate to back UK investment, and the pound would ground to a halt.

If Leave won again, we’d be left back at step one – the same divided society with the same ambiguities. Businesses will have, according to UK government, suffered another year of confusion over the future of our trading and access to EU markets, only to remain in the dark for another indefinite period of time.

If Remain won, then while it is refreshing to consider that prospects remain the same, are we confident that will be the case? The EU seems to believe so, but there is certain legislation that UK government are interested in losing – leading us to believe that, whichever way we choose, negotiations are sure to bring further instability to UK industry.

What’s important to consider is that the UK’s employment rate has grown despite the world shifting around us. Franchising especially has developed as an industry in its own right over the past three years and continues to successfully employ around 700,000 workers. The reality of Brexit was, and continues to be, insecure markets and unstable trading relationships – but British businesses haven’t ceased operating.

Leaders are starting new companies every day, hiring staff and contributing to UK infrastructure. So, if you’re looking to launch your own operation, don’t allow doubt to rule your decisions – work as you did before and grow with others in 2019. In uncertain times, you are often safer investing in a need not a want – so explore the specialist cleaning sector, for example, as opposed to opening a gym or coffee shop (the visiting of which the public is likely to cut first from their budget when it’s feeling the squeeze).

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