With Brexit looming, many independent enterprises fear they will be among the first to suffer when Britain leaves the EU – especially in the event of a ‘no-deal’.
Warning on Wednesday that a no-deal Brexit could impose “a very severe disruption to trade”, the Bank of England published an 88-page document depicting worst-case-scenario blows to the economy.
The predictions suggest that in the “disruptive and disorderly scenarios”, by the end of 2023 UK GDP will plummet to between 7-10 per cent lower than the May 2016 trend, with unemployment potentially rising to between 5-7 per cent and inflation rising to a similarly bleak 4-6 per cent.
Though predicated on the notion of worst-case, “disruptive” scenarios, and fully acknowledging that a good Brexit deal could paint a different picture, the lack of certainty is causing anxieties for smaller businesses.
Word on the street
Owner of an independent cafe in Surrey, David Symons said: “Having looked into it more, I think it could affect my recruitment and supply chain in a pretty big way. Uncertainty in the marketplace is certainly a worry. I voted leave without much consideration for my business, but I’m more informed on the risks now, and given another the chance I would definitely vote to remain.”
The owner of a newly launched eatery in the Kingston area said: “Starting a business is always going to be a big challenge, but this [Brexit] definitely adds a different level to it. No one really know what’s going on, which is the worst thing about it. A lot of our stock comes from Europe so who knows what’s going to happen”.
Aside from the wider issues, certain industries are likely to suffer more than others. “So much of what we do is based on first week sales”, said Jon Tolley, owner of Kingston-based record store Banquet Records. “So, if it’s taking five days for a distributor to get their product to us, that’s a serious problem. If most of my stock is sitting in a warehouse in Calais, that’s a big problem. There’s not much I can do at that point. And I guess the bigger picture issue is that if the economy worsens, people will have less money in their back pockets.”
Uncertainty is the principle fear echoed by businesses up and down the country, whatever their size. Panasonic has opted to relocate its UK headquarters to Amsterdam, companies such as Nissan have had to delay investment plans due to the financial risk and may also be forced to relocate, and John Lewis has experienced a major decline in profits, which it attributed in part to Brexit uncertainty. Potential losses of skilled workers, reduction of FDI (foreign direct investment), and losing access to the single market are all significant concerns.
Potential for growth
Whilst doom and gloom appears to be the perennial theme, it can be argued that if approached correctly, British business can survive the transition.“It’s not too late to take a different approach”, said Confederation of British Industry (CBI) director-general Carolyn Fairbairn during a presentation at the University of Warwick.
“Proposals will require flexibility and creativity. From both negotiating teams.The problem is that time is running out”, she said.
This said, proceedings may be set to take an upward turn in coming weeks, with the Prime Minister currently awaiting approval on what she claims to be a deal “firmly in the national interest”.
Wednesday’s Bank of England report also presented a series of more positive forecasts based on the prospect of an orderly Brexit and a ratified transition agreement. In one such scenario, under which the UK and European Union retain close economic ties, GDP is predicted to grow even faster than in recent years.