On Friday morning small business owners woke up to find out that Britain has voted to leave the EU. Businesses have been divided during the referendum and for many it was a campaign full of unanswered questions, but now the results are in small business owners want to know exactly what it means for them.
The Leave campaign has argued that EU laws and bureaucratic red tape are a burden on small businesses, and that they will thrive once they are free from these and the UK is able to independently forge its own free trade agreements.
For now though businesses must continue to abide by the same EU rules that they have been up until now, and await new ones in the coming months and years, as free trade agreements will take some time.
This uncertainty is unlikely to be received well by small businesses, and business lobbies are already calling for action. National chairman at the Federation of Small Businesses (FSB), Mike Cherry, has called for stability in order to reassure small businesses in the UK in the wake of Leave victory in the EU referendum. He has also called for details of how business will access the single market, and manage trade and people movement.
“Nearly a quarter of FSB members export, with the majority exporting to the single market. Access to the single market means access to 500 million potential consumers, more than 26 million businesses and is worth 11 trillion euros,” he says.
“These are crucial questions that need to be answered swiftly to ensure the UK’s 5.4 million small business confidence does not fall any further, which is already at the lowest levels since 2013.This includes clarity over the practical implications of this result on how smaller firms do business.”
Carolyn Fairbairn, CBI director-general, echoed the FSB’s call for calm. “Many businesses will be concerned and need time to assess the implications. But they are used to dealing with challenge and change and we should be confident they will adapt,” she says.
“The urgent priority now is to reassure the markets. We need strong and calm leadership from the government, working with the Bank of England, to shore up confidence and stability in the economy.
“The choices we make over the coming months will affect generations to come. This is not a time for rushed decisions.
In the short-term David Cameron has reassured the country that nothing will change for firms employing EU citizens, or for businesses’ trading relationships.
Responding to statements made by the prime minister and the governor of the Bank of England
Simon Walker, Director General of the Institute of Directors (IoD) said “For those wishing to replace him [David Cameron], we urge top priority is placed on negotiating a new arrangement that gives UK companies access to the single market, and the much-needed skills of EU workers.”
“Governor Carney has done what he can to reassure businesses that the Bank of England will take the measures it thinks necessary to ensure financial stability. Companies will adjust to whatever trading relationship eventually emerges, and will be putting their faith in the Bank and the Treasury to help them ride out the inevitable uncertainty that faces them now.”
The IoD has also put together some useful opinion and guidance on what this means for businesses and what small business owners should be doing to prepare for the changes ahead.
This includes advice from Management Today on alternative trading options and financial planning tips from City AM.