Small to medium -sized enterprises face a substantial amount of financial ambiguity
With little over 100 days to go until Brexit and growing uncertainty surrounding the Prime Minister’s ability to get the deal agreed in parliament, small to medium-sized enterprises (SMEs) – whether aware or not – face a substantial amount of financial ambiguity.Although we have seen a steady rise in lending against assets during Q2 of 2018, it is important that SMEs don’t remain complacent about the future and instead, adequately prepare for all eventualities of Brexit; with or without a deal.
According to research carried out by the Federation of Small Businesses (FSB), only 14% of SMEs surveyed have started planning for a no deal Brexit with a further 41% believing that Brexit will have an impact on their businesses but haven’t got round to preparing for it yet. Whilst Brexit may seem like a concern only to be considered in the future, the importance of immediately assessing how Brexit could affect SMEs can’t be stressed enough.For example, Brexit will no doubt bring with it the removal of access to certain EU funding schemes for SMEs. The knock-on effect of this will also place increased pressure on UK lenders to step-in and provide financial products to bridge any void. Chief Executive of UK Finance, Stephen Jones, said that “A ‘no-deal’ scenario can and should be avoided. Both the UK and our EU partners should focus on agreeing a managed exit and a clear framework for cross-border trade including in financial services. However, it is right that contingency plans are made to minimise the disruption for consumers and businesses on both sides of the Channel in the event of a ‘no-deal’.”
Interestingly, for certain sectors it could also see government intervention similar to that of the US with the Trump administration recently pledging aid to farmers in the wake of the trade war with China and the EU. One thing’s for sure and it is that the current tensions on a global scale are making it very difficult for UK plc to accurately predict how the cards will fall.
Uncertainty and the decision to move back the vote in parliament has no doubt led to the fall in confidence in the sector, with the findings of the Federation of Small Businesses (FSB’s) Q4 Small Business Index (SBI) indicating that confidence is at it’s lowest in 7 years. Mike Cherry, the national chairman of the FSB said: ““We’ve not seen political uncertainty weighing on small business confidence like this for many years. Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time”.
The lack of clarity emphasises the importance for SMEs to review the different scenarios that could play out in the coming months to ensure that they can successfully weather any impact they may face.