Brexit uncertainty has gone on too long for UK SMEs

brexit uncertainty and migrating businesses

Will Brexit uncertainty turn businesses into migrating birds?

In the days running up to last Friday’s cabinet meeting at Chequers many of the UK’s largest businesses were warning that complete lack of agreement or clarity on the details of the Brexit negotiating position meant that time was fast running out for them to plan their future operations.

Businesses, both large and small, were clearly also less than impressed by the Government’s lack of attention to and understanding of their need for clarity so they can make practical plans.

So, while I have avoided commentary on the tedious, ongoing Brexit saga as far as possible, for once I am focusing on it, not least because of the events of the last few days.

After the Chequers meeting, it seemed that at last there was a “third way” proposal over which there was cabinet unity.  The details are expected to be published later this week.

But it seemed that at last business concerns and the future of the economy were finally front and centre in the proposals and this was tentatively welcomed by businesses.

By Monday, however, all was up in the air again as the UK’s main negotiator, David Davis resigned, along with another leading negotiator Steve Baker, and the chorus of disagreement from the usual Brexiteer suspects in Parliament was growing louder. And then Boris!

As an aside I can’t help thinking about petulant children who don’t get their way and the lack of leadership by those seeking to distance themselves from an outcome that was always going to be based on compromise.

Why businesses, particularly SMEs, urgently need an end to Brexit uncertainty

The key issues for SMEs, many of which are involved in pan-European supply chains, are clearly what the eventual outcome will do to costs and access to various components or raw materials not to mention access to skilled labour and markets for our goods and services.

It is not only the large supermarkets that operate a “just in time” model for supplies, so do many manufacturers. The model helps to reduce overheads and the costs and cash tied up when holding a large amount of reserve stocks, not to mention the warehousing needed.  However, it also relies heavily on reliable, prompt and efficient delivery.

If the eventual agreement on import, export and customs arrangements cannot guarantee the same level of efficiency it is likely that businesses may have to move to Europe if they want to survive.  Many are already considering doing this.

What the UK Brexit negotiators do not seem to have taken on board is the time most businesses will need to set up and carry out such a relocation, plus the effect it might have on job availability in the UK and on the UK economy.

Sourcing skilled workers in some key sectors has for a long time been a problem in the UK and the gap had been filled by workers coming into the UK, particularly in the construction, fabrication, engineering and IT sectors. Here too, uncertainty has taken its toll.

However, by the end of last week it seemed that these concerns were reflected in the new proposals and at last the concerns of eventual customs arrangements had been addressed along with the possibility of “special” arrangements to allow EU workers to be able to work in the UK post Brexit under similar arrangements as previously.

Of course, thanks to yesterday’s developments the fog of Brexit uncertainty could descend yet again and then there are the “unknown unknowns” of a looming US president-inspired global trade war, admittedly nothing to do with Brexit but far from helpful.

It would be no surprise if SMEs and larger businesses alike decided enough was enough and started the process of moving elsewhere. Are you likely to be one of them?

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