Would a Brexit Break or Boom Small Businesses in the UK?

UK

As the opinion-splitting referendum on European Union (EU) membership for the UK looms, debate rages on the impact of businesses, trade flows, people and everyday lives. Even within SME business circles there is no clear consensus, with more than two-fifths of entrepreneurs saying they are undecided.

Benefits

Tax

The UK’s contribution to the EU budget costs about £140 per person, per year. If we leave, there may be tax reductions which put money in people’s pockets.

Less red tape

EU rules and regulations are often described as holding British SMEs back with excessive and time-consuming paperwork. Leaving the EU may allow the government to roll back some of these and promote stronger innovation and growth. However, leading politicians say this possibility is over-exaggerated.

Working time directive

Our current rules on working hours, annual leave and parental leave originate from Brussels. SME owners would almost certainly appreciate changes and flexibility to these expensive policies.

Single market membership

Those arguing in favour of Brexit say Britain could continue to access the European single market via an agreement, similar to the one held by Norway, which does not come with obligations for national home affairs, justice or agriculture policies.

Export

Choosing to leave would give the UK freedom to negotiate its own trade deals; potentially on more favourable terms than those led via Europe.

Downsides

Workforce

The free movement of people across borders that the EU provides has kept a flow of willing workers to large swathes of British businesses. Removing this provision would remove a significant, and educated, chunk of the jobseeker market.

The economy

According to the most recent research available, three million jobs in the UK are linked to trade with Europe. Access to finance may also feel the pinch if the country’s credit rating is downgraded due to uncertainty in the markets.

Contracts

Business owners in legal contracts spanning the period beyond Brexit may find the imposition of tax, duties or other charges make the supply of these goods not economically viable. It is unclear whether a British Leave vote would constitute a “force majeure”, which could break these without penalty.

Trade

As EU members, UK businesses can readily export into other member state markets. If we leave, import taxes may come into play and considerably impede our ability to offer a competitive price.

Farming

Farmers currently benefit from significant subsidies from Brussels which, for some, make their operations viable. It is unclear if, or how, these would be replaced.

Campaigners on both sides are stepping up their arguments as the referendum draws closer, but it’s obvious that for business owners there are clear costs and benefits on either side. Weighing up the certainty of the deal we already have over the potential benefits of new arrangements is a personal decision, and not to be taken lightly.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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