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Small businesses need real support to avoid a chaotic ‘no-deal’ Brexit

Responding to the release of the first tranche of no-deal Brexit technical notices, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said:

“The dangers of a sudden and unplanned no-deal Brexit have today been laid bare. A pro-business Brexit is one with a transition period – a vital lifeline that won’t be there in a no-deal scenario. The smallest firms will be the least able to cope with a cliff-edge moment.

 

“It’s right to prepare for a no-deal outcome. That means following-up these notices with guidance that every small business owner can understand. ‘Technical’ is certainly the word – anyone without real expertise won’t be able to make head nor tail of these documents.

“Suddenly having EU tariffs applied to UK exports from 11pm on 29 March will cause huge disruption to small UK firms that trade internationally. Two in five smaller businesses that trade exclusively with the EU say they would be put off continuing to do so by a tariff of any size.  

“Small UK exporters will also have to negotiate the paperwork that comes with third country access to EU markets. It’s all very well for the Government to suggest that small businesses ensure they have the software, freight forwarders and brokers needed to make customs declarations in the event of a chaotic no deal. What ministers need to understand is that these are not big corporations, they don’t have thousands of pounds to throw at consultants and new tech.

“The majority of smaller businesses exporting goods to the Customs Union say sales would be impacted by the introduction of new customs declarations. Checks at borders, additional paperwork and the need to prove that EU exports have left the UK will mean mounting costs for small firms.

“We need to see parties on both sides of the channel – not least the major ports – working together to ensure we don’t have miles and miles of tailbacks at Dover and Calais once the UK’s withdrawal completes. 

“There’s also the many Free Trade Agreements with countries beyond Europe that we’re party to by virtue of EU membership to consider. Keeping trade easy with these countries is an absolute must. Continuity arrangements must be in place in the event of a no-deal Brexit.

“Allowing businesses to manage cashflow through postponed VAT accounting on imports from any country in the event of a no-deal outcome would ease the pain up to a point. However, there will be small UK firms feeling disappointed that no-deal will mean the end of easy access to the VATMOSS scheme for digital services sold to the EU.

“It’s disappointing that we haven’t received a technical notice on what a no-deal outcome would mean for those applying for settled status. One in five small firms that employ staff have an EU citizen on their books. These workers – the vast majority of which are mid or high-skilled – are absolutely critical to the success of our economy beyond March 2019. We need a definitive unilateral commitment to the rights of EU citizens to stay in the UK after Brexit.  

“We have to avoid a situation where passporting rights for financial services firms are suddenly withdrawn. The UK private equity and venture capital industry raised more than £6 billion from EU investors in the run-up to the Brexit vote – the majority of which has been invested in smaller firms. Cutting off this investment supply will make the UK a far less attract place to set-up shop.

“It’s good to see the Government reiterating its financial commitment to EU-funded initiatives up until 2020. Support from European Structural Investment Funds has helped thousands of UK small firms go from strength to strength in recent years. The hope is that the UK Shared Prosperity Fund lays the groundwork for a more streamlined, targeted and accessible business support landscape.”


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