Is a ‘Brexit’ the best thing for small companies?

Despite seeming remote in early 2015, the chance of a ‘Brexit’ (British exit from the EU) is becoming more and more likely, with recent surveys showing increasing numbers wanting to leave. But what would this look like for small business owners?

Mike Cherry, policy director for the FSB (Federation of Small Businesses), has highlighted how important it is to feel ‘informed’ about the forthcoming referendum from a business point of view. He said that ‘With the UK set to debate its relationship with Europe, it is vital we truly understand the business case for staying in or leaving the European Union.’

The current mood amongst small business owners seems to be in favour of staying in the EU, and in a poll of business owners done by YouGov, a majority said the UK’s membership of the EU positively affected their business. There are fears that if the UK votes to leave the EU then SME’s may be put at a disadvantage to their competitors in other member states, as it would become more expensive and complicated to conduct trade with other EU countries. This would affect UK business as the EU is currently the UK’s main trading partner, with 52% worth of the country’s trade in goods and services.

Furthermore, leaving the EU would diminish the selection of candidates to choose from with regard to employment, as currently UK businesses are free to employ workers from any of the member states without having to obtain a work permit.

However, small UK businesses do seem to be split over whether to stay in the UK or not. An FSB report found that whilst 47% of members would vote yes to stay in, around 41% would vote to leave. Many people are questioning whether there would really be much of an impact on small businesses if the UK left, as the money saved by Britain through no longer contributing to the EU could be used to help SME’s in other ways-for example, by reviewing employment laws. Others believe that exiting the EU will be good for small businesses as by integrating less with Europe the UK will be able to turn itself into a global hub for entrepreneurs

For most, the question of the EU membership is not a black and white, in or out issue, as many small business owners support the idea of remaining part of a reformed EU. What we do know is that it is important that voters are well informed about the upcoming referendum and its impact on businesses.

However, the FSB has found that the majority of small business owners feel as though they lack understanding of the complexities of the debate. The FSB also raised issues around the perceived lack of unbiased, neutral information, and are concerned that UK citizens will be voting without access to the right information to make an informed choice. To combat this they have introduced an online discussion forum and an ‘EU fact sheet’ which small business owners have described as excellent in providing them with the information they need for the upcoming referendum. pages 61-63.