Research shows small businesses want a Norway-style Brexit deal
Since my last Brexit blog, there have been a number of significant developments. Not only did the Prime Minister fail to secure support for his revised Brexit deal, Parliament has voted in favour of a General Election on 12 December 2019.
New research shows that the majority of small business owners in the UK ideally want to see a ‘Norway-style’ Brexit deal. This would effectively keep trade within the single market and ensure a smooth transition. However, before we look at whether that is likely, it’s worth catching up on Brexit developments in general.
Why is a Norway-style Brexit deal wanted? A Brexit update…
At the time of writing, the EU has agreed to Mr Johnson’s forced request for a further extension to the date the UK must leave. This is the third such extension since March 2017 when then Prime Minister Theresa May triggered Article 50. That decision effectively set the clock to countdown to the original Brexit date of 29 March 2019. The current date for the UK to leave the EU is set at 31 January 2020.
So, why did MPs reject Mrs May’s deal in the first place? The major point of contention for most lies in the Irish ‘backstop’. This was proposed as a way to make sure there is no disruption to trade at the border between Northern Ireland and the Republic of Ireland following Brexit. This failed to get the support of many MPs who say they are concerned that it effectively keeps the UK subject to EU rules indefinitely.
When Mr Johnson became Prime Minister in July 2019, he revised this part of Mrs May’s deal. He proposes replacing the backstop with specific customs arrangements that he says will allow the UK to make deals with countries outside of the EU. The rest of Mrs May’s deal remains pretty much the same.
And while the Prime Minister hoped to get his deal through Parliament in record time, this wasn’t to be. Instead, Parliament voted to postpone a vote on this deal in favour of ratifying the withdrawal agreements into law. This triggered the need for the Prime Minister to request another extension from the EU, which was granted. It is, in theory, still possible for the country to leave the EU before the 31 January 2020 if a deal gets through Parliament.
General Election set for early December 2019
All of which lead us to the Prime Minister’s repeated calls for a General Election. This was finally agreed on 6 November, with the date set for 12 December 2019. Mr Johnson, of course, hopes to regain a working majority in Parliament so that he can get his Brexit deal passed.
It remains to be seen whether the Conservatives can land this working majority. It is still worth bearing in mind that there remains the chance that the UK will leave the EU with no deal at all. And according to research, this is what concerns small businesses the most.
Should the UK leave with no deal then the EU will immediately introduce checks on trade. This is because the UK would leave the customs union and single market in one fell swoop and will have to adapt overnight. It is likely that the pound will drop if this happens, leading to the potential for food and medicine shortages in the UK.
Data from new research shows that more than half (55%) of UK small businesses do not want a no-deal Brexit. Instead, they’re in favour of a ‘Norway-style’ agreement regarding goods and services. This would include remaining in the single union and continuing to follow EU rules on trade. This is a particular concern for small businesses that routinely source goods and services from the EU and cannot find suitable alternatives in the UK.
Still positive within the small business community
Despite this ongoing uncertainty, research also shows that business leaders are generally feeling positive. A poll conducted by the Institute of Directors (IoD) included one thousand of its members. The results show that many small businesses managed to grow in 2018, despite Brexit uncertainty. Around 13% actually doubled their turnover in that period.
The poll also shows that half of business owners see Brexit as negative, while 10% see it as positive. Concern is roughly double over the possibility of a no-deal Brexit (48%) than another extension (22%).
While Brexit itself is far from clear, there is clarity surrounding a deeply divided business community and country. About 39% say that they see Brexit as both a threat and an opportunity, with 34% saying it’s purely a threat to the success of their business.
For many business owners, Brexit is not clearly positive or negative. They see it as a development that they must deal with and factor into their business plans somehow. Many concerns over Brexit boil down to the single market, and while there may be new opportunities for trade with other countries, this remains opaque.
Other challenges facing small business sector
The IoD poll splits the major issues concerning businesses in the UK into the following categories:
- 48% are most concerned about the economy.
- 37% say Brexit is their biggest worry.
- 23% cite business taxes as a major concern.
- 17% worry about the skills gap.
- 16% are worried about the impact of late payments.
- 16% are concerned about access to funding and financial help.
So, while Brexit is a major concern, it is not the only challenge facing small businesses as we move towards the end of 2019. The UK has always been a leading hub of entrepreneurial activity and innovate thinking.
As we can see, it’s not just Brexit that concerns small business owners as we head towards the end of 2019. The UK is a major hub of entrepreneurial activity, and I have no doubt that being part of the EU has helped this. Easy access to trade, staff, talent, investment and trade can only have helped the sector grow. As such, it’s understandable that small businesses are concerned about Brexit and its impact.
Innovation thrives on challenges and change. Disruption is part of what it means to be within this dynamic business sector. However, there is a difference between challenge and chaos, and I think that the Government must ensure that Brexit is a smooth process. Both the UK and the EU must work together to ensure that both sides get the best result, so that the entrepreneurial drive can continue to create strong, dynamic economies.
