A significant portion of small- and medium-sized enterprises (SMEs) surveyed by Bibby Financial Services expect a “hard Brexit” to occur — that is, the U.K. will complete its exit from the European Union (EU) by the March 2019 deadline without a trade deal, exiting the EU’s Single Market.
Small businesses (SMBs) also expect the U.K. to complete its Brexit transition before it secures a trade deal and before it adopts World Trade Organization (WTO) rules, with 35 percent of SMBs surveyed predicting this scenario, according to the report as covered in Insider.co.uk on Friday (Oct. 27).
But researchers also noted slightly more SMBs — 36 percent — said they predict a soft Brexit and have confidence a trade deal will be negotiated to remain in the Single Market. Only about a tenth of survey respondents said they believe a soft Brexit — a Brexit with a trade deal — will be completed by March 2019.
Meanwhile, 29 percent admitted they don’t know what’s going to happen.
In surveying small businesses’ Brexit expectations, researchers also found that confidence among small business owners declined quarter over quarter in Q3. The quarter’s confidence score hit 58.7 out of 100, significantly below the 75 score marked in Q1 2014, the survey’s highest recording.
Nearly a third of SMB owners said their costs have risen since the Brexit vote in June 2016, while more than a fifth said domestic sales have declined. A quarter pointed to economic uncertainty as a key challenge to investment, while 23 percent said rising costs are preventing them from investing.
“Uncertainty isn’t good for business, and Brexit is uncertainty in its most acute form,” said Bibby Financial Services U.K. Chief Executive Edward Winterton in a statement. “One thing the SME community is certain about is that we are leaving the EU. What is less clear is what Brexit will look like.”
“Despite the Prime Minister’s recent speech in Florence, the country’s small business leaders are evenly split on whether the U.K. is pulling out of the EU fully, or whether there is still a possibility of remaining in the Customs Union and accessing the Single Market,” he added.