A third of SMEs couldn’t operate without EU imports says study

A third of SMEs couldn’t operate without EU imports says study

Three-fifths would see a decline in profits.

A Brexit-induced supply chain bottleneck could paralyse as many as a third of small to medium sized businesses, according to new research from Bibby Financial Services (BFS).

A substantial minority of companies are so reliant on EU suppliers that they couldn’t function without a steady input of goods from them. Worse still, over half (55 per cent) will struggle to find alternative suppliers in the UK.

As part of its regular SME Confidence Tracker series, BFS conducted a study into the possible effects of Brexit on its 7000 clients, who range from startups to £150m turnover enterprises. A typical user of BFS’s overseas financial service expertise has annual revenues of around £1.75 million.

A sample group of 1000 companies was interviewed over their concerns about the possible effects of Brexit.

One fifth (20%) of UK SMEs currently import from the EU, which equates to 1.1 million businesses. If the BFS study is an accurate reflection of national trends, a potential ‘no-deal’ Brexit could massively disrupt not just trade between the UK and EU but the internal economy of the UK, BFS UK CEO Edward Winterton told Tate’s Export Guide.

“Brexit threatens to completely derail the streamlined importing processes which many SMEs thrive on,” said Winterton.

Imports are not given the same emphasis as exports when trade targets are set, Winterton said. “It is time eyes were opened and importing recognised as equally important for SME survival. Unless importing rises higher up the government agenda, the survival of SMEs could be put at risk.”

The research also shows that three-fifths (61%) of UK SMEs that import from the EU would expect profits to fall if they could no longer access the EU single market.

According to a joint BFS and British Chamber of Commerce study in 2018, SMEs have made little preparation for the effects of Brexit. It found that the majority (62 per cent) of UK SMEs have not conducted a risk assessment on Brexit’s impact.

The cautious optimism found in SMEs at the start of the year has evaporated as the EU negotiations have yielded confidence sapping results, according to Winterton.

“SMEs need clarity so they can prepare and focus their efforts on business survival and growth,” said Winterton. 

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