Brexit & the independent business sector. What does the Brexit deal mean for British entrepreneurs, independent traders & SME’s?Virtually Smart Ltd investigates.
The remaining 27 countries of the EU agreed to the Brexit agreement drawn up by Theresa May yesterday (25.11.18), in advance of the March 2019 withdrawal date.
The remaining 27 countries of the EU agreed to the Brexit agreement drawn up by Theresa May yesterday, in advance of the March 2019 withdrawal date. The 600 page document outlines the European withdrawal treaty, which when signed, will become a legally binding document. The document will now be voted on in parliament in early December. Only once this has been approved by the UK cabinet, will the Brexit agreement be able to move forward.
As has been very publicly reported, not all of Theresa May’s cabinet have agreed with her choices & we have seen 14 cabinet members resign in the past months, citing Brexit uncertainty as their reasons. This uncertainty & the disagreements in cabinet, have, the media has reported, put Theresa May in a position whereby her cabinet has repeatedly called for a vote of no confidence in the Prime Minister.
However, with the agreement having now been signed & the next phase of the withdrawal starting back in Parliament this week; Virtually Smart Ltd have been monitoring the impact the Brexit process has been having on the UK economy, how businesses large & small have been reacting to the EU withdrawal process & what the independent business sector feels in the build up to leaving the EU.
One of the areas we have seen a slump in revenue due to Brexit uncertainty, is in the UK car sales & manufacturing sector. With European emissions regulations changing regularly & with the UK seeking to ban all new petrol & diesel cars being manufactured & imported by 2032; we have seen a downward trend in sales of certain models.
‘New figures from the Society of Motor Manufacturers and Traders show that 338,834 new vehicles were registered in September, a fall of 87,000. The SMMT is blaming new tougher emissions tests, which left some manufacturers struggling to keep up.
The slump was wide-ranging. Sales to private buyers slumped by 20.1%, ‘fleet sales’ dropped by 22%, while purchases by businesses dropped by 6,3%’ (1)
Jaguar have put their diesel manufacturing team at their Castle Bromwich plant on a 3 day week (staff being kept on full pay) up to Christmas, as they simply do not have the confidence through the Brexit negotiations period, to continue a full manufacturing cycle.
‘Jack Dromey, the Labour MP for Erdington, blamed “Brexit chaos and the mishandling by ministers of the transition from diesel” for the three-day week.
He told the BBC the government had sent “the message that somehow if you buy a diesel car, they’ll be worthless, in circumstances where actually the new generation diesels are ultra-low emission produced by the company. So, there’s been a real problem there.” (2)
Despite the uncertainty in some of our major manufacturing industries, there does seem to be an upward trend in the entrepreneurial market in the UK with UK startup’s being worth £2.45 billion in venture funding in 2017 alone. Even though we have seen many of our high street names close their doors this year, we continue to see SME’s thrive as they continue on their unique entrepreneurial journeys. According to the Office for National Statistics, the number of self-employed workers increased from 3.3 million in 2001, to 4.8 million in 2017.
In the letter to the nation penned by Theresa May on Saturday 24th November 2018, the Prime Minister had the following to say about the UK economy.
“The deal also protects the things we value.
“EU citizens who have built their lives in the United Kingdom will have their rights protected, as will UK citizens living elsewhere in the EU.
“A free trade area will allow goods to flow easily across our borders, protecting the many skilled jobs right across the country that rely on integrated supply-chains.
“Outside the EU, we will be able to sign new trade deals with other countries and open up new markets in the fastest-growing economies around the world.” (3)
Therefore, why in the face of the UK leaving the EU & with the economic uncertainty of a UK withdrawal, do we see the trend continuing in the self-employed & independent trader’s market & what do those in the independent sector really feel about the Brexit agreement? Forbes have recently undertaken interviews with 5 entrepreneurs to gain insights into their thoughts on the Brexit deal & how it has affected or could affect their businesses. Two different insights were given by UK based Sean Ramsden, Founder & CEO, Ramsden International & Natasha Guerra, Co-founder and CEO, Runway East
Sean Ramsden, Founder and CEO, Ramsden International
“The current deal seems to me to broadly strike the right balance – let’s face it, nothing would have made everyone happy! Ultimately, businesses do need certainty so they can plan, and politicians trying to score points is pretty unhelpful, as are those seeking to reverse the decision I think.” (4)
Natasha Guerra, Co-founder and CEO, Runway East
“The strangling of the flow of technical talent from Europe has undoubtedly already had an impact on my business. We provide co-working space for startups, so when our customers struggle to grow, we miss out on revenue from providing them with additional space. Lots of our members have reported struggling to hire, and a large part of that is because talented people in Europe are rightly wary of moving to the UK right now.
Startups across the UK are still building amazing businesses despite Brexit, but I’d love for us to remain or have as soft an exit as possible, and for the government to get back to providing an economic environment where growth can flourish.” (5)
Interestingly, it is not only UK based independent traders & entrepreneurs who have a voice about the UK withdrawal from the EU.
‘Two-thirds of European entrepreneurs feel that Brexit will harm their business and 95% want a stronger say in European Union trade policy.
While they are supportive of the value of the EU negotiating trade deals on their behalf (94% feel it makes a difference to the competitiveness of their business), an overwhelming 92% are not sufficiently aware of the commercial implications, meaning that opportunities for job creation and economic growth could be left on the table.’ (6)
Therefore, with there clearly being concerns & uncertainties from the UK & EU entrepreneurs & as we now await the next phase of this 19 month process to unfold, are we any more clear about the impact that leaving the EU will have on our economy? With the exit costs for the ‘divorce’ settlement looking to reach £60 billion, is the UK ready for this vast severance payment? ‘The Vote Leave campaign had notoriously claimed in the referendum campaign that quitting the EU would free up around £350m a week of extra funding for UK public services.’ (7) However, it has been estimated in November 2017, that around £300m had been lost for each week since the June 2016 referendum.
So, where does this leave us on the cusp of the parliamentary vote? Are British businesses ready for the outcomes & what will the impact be on the British economy if the withdrawal agreement is approved by Theresa May’s cabinet?
Written by Katy Jane on behalf of Virtually Smart Ltd
(2) https://www.bbc.co.uk/news/business-45550025
(3) https://www.gov.uk/government/publications/pm-letter-to-the-nation-24-november-2018
