Small Business Investment plans in chaos as small firms fear uncertainty
‘Businesses need answers to big questions’ as vote has immediate effect on trade
EXPANSION plans are already being put on hold by small enterprises following Friday’s referendum result, experts have warned.
James Abbott, president of UK200Group, an association of advisory accountants and lawyers, said: ‘The legalities of Brexit will take a good two years at least to be put in place, but there are implications in the very short term.
‘For example, I have a client who is a plumber and he is concerned about how customers are going to feel. Confidence is a big thing, particularly over these next few weeks. He was thinking of buying a van, but will probably delay that decision until we know more about what is going to happen.
‘The result affects even the little businesses. We’ve got eBay sellers and they often buy goods from places like China because they are cheaper. Now the change in foreign exchange rates is going to have an impact on them. When they are buying, things are no longer going to be cheaper, so even the smallest businesses are going to be hit by the immediate changes that have happened literally overnight.’
Adam Marshall, acting director-general of the British Chambers of Commerce, said: ‘I think a period of reflection and analysis is in order. Companies need to assess their level of exposure to the coming transition and the opportunities and challenges that presents.
‘That aside, businesses across the UK will expect stability, clarity and answers to some of the big questions they face. So they don’t want an allencompassing Westminster postmortem. They want real attention to issues that the economy faces alongside the start of this very big transition.’
He added: ‘For some companies there will be a direct and immediate impact. Quoted companies have seen some of that. Particular sectors like financial services and housebuilding have also seen some big effects in the short-term.
‘Companies that trade with Europe will obviously be looking carefully at everything from currency fluctuations through to their future export strategy or investment strategy. And importers will also be thinking about where their goods come from and the impact on their margins.
‘So every business has its own set of considerations and challenges to look at as we approach the transition to leaving the European Union.’
Claire Burrows, founder of shoe maker Air & Grace, has just started exporting to Japan and Germany and had been looking into her ‘next steps’ for further exports, but she expects to put that on hold now.
She said: ‘For my business it is tricky. I think it is for anybody, because there will definitely be a period of uncertainty, which I feel will hit consumer confidence. Nobody really knows what is going to happen. It will lead to prices going up, especially in my case. I’m buying my shoes from Portugal at the moment.’
She said the referendum had already affected her before the result was announced. ‘I’ve taken that hit on the margin,’ she said. ‘If the pound is to be devalued further, I couldn’t do. That’s just going to lead to me having to put the prices up and pass it on to the consumer, which I don’t want to have to do, especially as we’ve got a very price competitive product that is working. To put your prices up is automatically a barrier to growth.
‘I was purchasing, I had orders coming out of the factory, at the time the pound dropped against the euro, back in the spring. After the referendum was announced there was a bit of a wobble on exchange rates, and that hit me. ‘Going forwards, you can’t sustain absorbing that into the margin. This is a small business – I just don’t have that capability.’ But Marshall warned against exaggerating the effect of the referendum on investment and export plans. He said: ‘It’s too early to tell whether businesses are going to simply slam on the brakes. Inevitably, some firms will deem it necessary to put future plans on hold, but we have to be very careful not to overblow that possibility. Because in addition many firms may see some big opportunities over the coming weeks.’
Nobody really knows what is going to happen – I will just have to put up prices