Britain and the EU: SMEs speak out on Brexit

Should Britain leave the EU?
Should Britain leave the EU?

Here’s what Britain’s small and medium-sized businesses think about a potential Brexit.

The threat of a British exit from the EU, known as a ‘Brexit’, continues to divide opinion. What might a potential Brexit mean for the UK’s small and medium-sized businesses?

Here’s what a cross-section of the SME community had to say on the matter:

Stuart Miller, CEO of click and collect locker provider Bybox:

“As entrepreneurs, we typically want to unleash our inventions onto as big a market as we can, as fast as possible. So at first glance, a single European market should be a gift from the entrepreneurial gods.

“Sadly, the reality is very different. The operational mechanics of the single market make it very difficult for entrepreneurs who are wired for rapid growth and intolerant of barriers and bureaucracy. Everything from unwieldy employment law to subtle but critical differences in local tax regimens soak up the energy and funds that could be spent far more productively. If you don’t believe me, then try employing somebody in France through a UK company, or something as simple as establishing the correct treatment for VAT in the Benelux. I’m an entrepreneur – I just want to solve problems and sell stuff!

“Are these frustrations powerful enough to vote for an exit? No. Even though the EU is far from friction-free, it is still easier to trade within it then if we were outside of it. But we should stop kidding ourselves about such fundamental issues as free movement of labour and seamless trading. If governments can attack these issues with the same verve that entrepreneurs attack their markets, then we should be optimistic about a proper single European market.”

Andy Bagnall, director of campaigns at independent employers’ organisation the Confederation of British Industry (CBI):

“Of the SMEs we talked to, they had exactly the same list of benefits from the EU as those of larger firms: access to the marketplace, free movement of people, ability to access finance and the trade deals that the EU is able to unlock.

“The kind of reforms [that our members] are interested in focus around competitiveness. They want a more open, outward looking and competitive Europe – more open in the sense of extending and completing the single market, particularly ensuring the 2006 services directive is properly enforced across the EU.

“They want a more outward looking EU, signing more trade deals and the commission to put more resources into negotiating those deals. The big show in town at the moment is the transatlantic trade and investment partnership, the EU-US trade deal, which we estimate could unlock as much as £7bn for the UK economy in terms of GDP growth.

“Critically, small businesses wanted a more competitive EU in terms of the way the European Commission approaches regulation. Firstly, they want the right balance between member states and the EU institutions, so the EU to focus on the big issues that drive jobs and growth and not regulate in unnecessary areas. But they also want the very process of producing regulation [to be improved]… if the Commission puts small businesses at the heart of its thinking when designing regulation it’s likely that the regulation would be improved as a result.”

Luke Lang, CMO and co-founder of crowdfunding platform Crowdcube:

“The general public need to become more aware of the benefits of the UK being part of the EU and how that has had a positive impact on our commercial business life, but also from a personal point of view too. For the last four decades since we’ve been part of the EU, it’s had a profound effect on the fortunes of the UK – how we are perceived by the world and how we are able to trade with other countries, not just in the EU but also further afield too. It’s unthinkable that we would leave and, if anything, I would like to see a strengthening of our ties with the EU.

“The only caveat I would bring to that is that sometimes a lot of the regulations and red tape that comes with the EU can have a suffocating effect on some businesses and sectors, because that is obviously a very difficult thing for the EU to balance… I’m not sure they can get it right for everyone.

“[The effect of a Brexit on UK SMEs] depends on a British SME’s reliance on trading with the rest of the EU… for SMEs in general, fluctuations in the economy can have quite a dramatic impact on the daily lives of those businesses that don’t necessarily have the momentum, capital and resources that can insulate them for big global economic shifts… [such as those witnessed during the economic downturn].”

Nick Martin, MD of speciality food distributor Harvey & Brockless:

“We are in favour of staying inside the EU on the basis that we import nearly half our products from the EU and anything that may make that supply chain more complex and therefore more expensive will have an impact on our cost prices and ultimately potentially our customers.”

Richard Shelton, director of Yorkshire-based craft microbrewery Ilkley Brewery Co Ltd:

“I feel that membership of the EU is fundamental to our continued growth as an SME. Export has always been a focus of our growth plan and trading within the EU involves far less administration compared to trade with the rest of the world. The single market gives us access to over 500 million EU consumers with free trade policy driving an increase in our revenues and, consequently, allowing us to employ more people.

“We need a strong, combined EU economic power that does not allow the growth economies, such as China, to dominate world economics. The danger of leaving the EU would leave us destined to be recognised primarily as a tourist destination rather than a key player in the global marketplace.”

Adam Reynolds, CEO of cloud-based software provider Webexpenses:

“We might be an individual organisation but we want to deal with and link with other organisations… [likewise] we want to expand our solution and take this UK based business on a European journey, and it’s easier to do that if we are connected within the EU.

“We recently met with a couple of government bodies from France and Germany to discuss how we would expand into those countries. There are a number of grants, funds and opportunities that they provide but they are on the proviso that you are part of the EU. It’s clear that those opportunities are as a result of the relationship that we have with those countries… [because] we are connected through the EU.

“Only time will tell [whether it would be better or worse for UK SMEs should a Brexit occur] but I think we are in favour of staying connected and making use of the opportunities that those ties bring.”