Small businesses at sea over Brexit as the weak pound causes headaches
Theresa May has not triggered Article 50 yet, but the uncertainty stirred up by Brexit, and the weak pound, are already weighing on small and medium-sized businesses.
According to accountancy firm Moore Stephens, the fall in sterling in the wake of the Brexit vote on 23 June has been a key problem for businesses, with exchange rates particularly affecting smaller firms that rely heavily on imports from overseas.
The accountancy firm surveyed around 700 business owners to gauge their views on how Brexit will impact their firms in the coming year.
Read more: Parliament is likely to be virtually powerless as Brexit remakes Britain
Of those, 35 per cent said they had already been negatively hit by Brexit, though more were in support of Brexit than the year before. While 17 per cent were in favour of leaving the EU in 2015, this had risen to 32 per cent for 2016, though 56 per cent of business owners still remained opposed to leaving the EU.
Some 59 per cent were confident about the year ahead; a drop from 77 per cent recorded in the previous year and a three-year low from the survey. A fifth of business owners also expressed concerns that leaving the EU will make UK businesses less attractive to investors.
While the rise in prices caused by exchange rates has been felt by firms of all sizes, it came to public attention most prominently in Marmitegate, when Tesco temporarily withdrew Unilever products from stores after Unilever said the increase in imported goods had forced the firm to raise prices.
Read more: #Marmitegate: Tesco boss warns suppliers against hiking prices
Moore Stephens noted that various small businesses have been similarly affected; forced to raise prices or watch profit margins get eroded as their prices start to rise.
Mark Lamb, partner at Moore Stephens, said: “Just six months on from the Brexit vote a large number of SMEs say they have already been affected by the UK’s decision to leave.”
“The fall in the pound has meant that imports of raw materials and other goods are now significantly more expensive for businesses, particularly for those smaller businesses with a smaller cash cushion to fall back on.”
“General uncertainty over the future is also a key contributor for some as clients put projects on hold and customers pull back on spending.”