How do London’s SMEs feel about the Brexit trade deal? Do they think they will increase or decrease trade with the EU over the next few years? What will the impact of Brexit be on the different areas of their businesses? And how does this compare to the impact of COVID or a possible recession?
The London Business Hub wanted to find out the answers to these questions, and more, to understand how they can best support London’s SMEs through Brexit as part of the London Business Hub. So we commissioned the GLA’s Opinion Research team to undertake a survey looking at the impact of the Brexit trade deal on London’s SMEs.
We found that:
- The negatives of Brexit for SMEs are felt to far outweigh any positives – this is true regardless of SME size or sector. We asked how six different business areas might be impacted by Brexit (growth; sales; revenue; supply of goods; staff retention; recruitment) – for all areas of business, the negative impact of Brexit is predicted to be much larger than the positive impact.
- There are large differences in trading behaviours (and the perceived impact of Brexit) by the size of SMEs. Small and Medium businesses are much more likely to have traded with the EU in the past three years (52% of Small and 57% of Medium, vs. 31% Micro), and are therefore more likely to be affected by Brexit and the trade deal. Medium businesses are significantly more likely to be concerned about staff retention (17%, vs. 4% of SMEs overall) and reduced availability of labour (15%, vs. 7% of SMEs overall).
- Trade with the EU is highly likely to decrease. 53% of SMEs who have traded with the EU in the past year say they expect trade with the EU to decrease over the next 12 months, whilst just 6% expect trade to increase. The decrease in trade is particularly driven by Micro businesses.
- Brexit is ranked as the third greatest challenge currently facing SMEs. 27% of SMEs rank Brexit as a challenge, after a possible recession (36%) and another lockdown (34%).
- Overall, Accommodation and food services / Arts is the industry most negatively affected by Brexit. SMEs within this sector are the most likely to say Brexit is a challenge (33% say this, tied with Wholesale).
The survey was carried out between 5 – 19 March, and results weighted by size and sector to be representative of London’s SME population. The report is available here.
Helen Moore is a Senior Research & Consultation Officer in the GLA’s Opinion Research Team.