SMEs will suffer most from Brexit, study reveals
Innovative and export oriented firms and SMEs operating in high-tech and service-related industries will be the most negatively affected by Brexit, according to research.
A study carried out by academics from the University of St Andrews, using survey data collected from nearly 10,000 companies, has provided the first insight into the potential consequences of Brexit for small and medium-sized firms.
To take note of, the UK's 5.5m SMEs account for over 99% of the country's firms and 60% of total UK private sector employment, as well as for 73% of all net private sector job creation in the UK.
According to the research, SMEs are more likely to experience lower levels of capital investment, reduced access to external finance and lower levels of growth in the aftermath of Brexit. Britain's decision to egress from the bloc is also likely to lead to lower levels of internationalisation, innovation and new product development, the study found.
The survey carried out by the academics also revealed that 16% of SMEs questioned believed Brexit would be a major obstacle for the growth of their business.
Nonetheless, it was the bigger SMEs that were more concerned about withdrawal from the EU while smaller businesses had a more positive take on the new situation.
Regarding geography, more Northern Irish (25%) and Scottish (21.2%) firms saw Brexit as a major obstacle, compared to those in Wales (16.3%) or England (15.4%). By sectors, the business sector was most worried about the outcome of Brexit followed by Transport/Retail and accommodation.
The study also found that SMEs which considered Brexit to be an obstacle were less ambitious and innovative.
For most SMEs, ensuring free and easy access to the single market should be the key goal.
Dr Ross Brown, who headed up the research, said: "The perceived negative impacts appear to be foremost in the minds of entrepreneurs and managers located in the types of innovative and export-oriented companies, which are often viewed as the high growth 'superstars' of tomorrow.
"In other words, SMEs thought to be the most significant for boosting productivity and economic growth may be the most negatively affected by Brexit."