International Finance
Economy Magazine September - October 2018

Why the post-Brexit is good for SMEs

Why the post-Brexit is good for SMEs
Turns out, Britain’s chance to rewrite its character of governance has granted the domestic enterprises a milestone in international trade

The overwhelming debate over Brexit: where Britain is liberated from the European Union was referred to as a “historic mission” in British Prime Minister Theresa May’s speech on the final day of the Conservative Party Conference held last year.

The Brexit phase is an arduous process—that isn’t exciting and easy on the British society. And especially on those who voted Remain. For onlookers, age is seen as the greatest fault line. As The Financial Times model observed: 2021 will be the year showcasing reversed results, if it is to be re-taken. In short, the model suggest that a good rate of Leave voters will have deceased and Remain voters will have a fair chance to alter the fate of Britain once again.

But the British Foreign Secretary Boris Johnson during his conference speech displayed sheer confidence toward the exit: that Britain is leaving the European Union with ambitious desires to become “a champion of free trade” and eventually win an international repute: “global Britain.”

In addition to this more self-assured political outlook toward Brexit, there is much positive impact on small-and-medium-sized firms (Read: SMEs) in the UK. Last year, a new report commissioned by international payments company OFX noted the entrepreneurial shift post-Brexit: where SMEs swiftly moved their focus toward global sales. The survey covered 500 SME owners and senior managers. Of the respondents, two-thirds were bullish about establishing business overseas; 48% of respondents had increased international sales; and 26% of them were expected to start or increase exports in the next one year from the time of survey.

These firms are trying to capitalise on Britain’s global aspirations. The survey saw inflation become a rising concern for most businesses, since the referendum. Nearly 28% of SMEs had their sales dip in the UK market and 48% of them attributed this fall to inflation rise. Because the value of British pound reduced overseas, the goods and services were marketed at affordable cost for international buyers. Indeed, as much as Remain voters were against this national move, everything the Brexit vote intended, in part has come to fruition by strengthening the international trade for Britain’s taxing domestic market.

The weak pound is UK SMEs greatest vantage point. About 49% of businesses had increased the price of goods and services and 62% of them had clipped exorbitant price tags on raw materials.

Why the post-Brexit is good for SMEsReferring to the OFX survey, 70% of SME owners firmly believe their market will improve post-Brexit against a smaller percentage of contenders: 22% aged between 31 and 40; and 15% aged between 41 and 50, who are not fully ready to accept the watershed moment in the political history of the United Kingdom. In brilliant contrast to the observation made by The Financial Times model, millennials are more likely to embrace Brexit. Included are young entrepreneurs aged between 18 and 30. This is nearly absurd because a poll by YouGov UK advocated that Britons aged 65 and above were more than twice as likely to support the European Union exit, which reinforces the model’s assessment. However, in this regard, the majority of SMEs look to post-Brexit opportunities and new markets they can explore beyond the European Union.

WorldFirst’s ninth quarterly Global Trade Barometer 2018 lays emphasis on significant numbers about SMEs’ scope for international growth. The survey reflected more than 1,000 SMEs to study the Brexit uncertainty on international trade. One in four SMEs which represent 23% of the total has plans to export to a new country in the current quarter. Likewise, 30% of them remain bullish about firming up their business in global markets.

Jeremy Cook, Chief Economist at WorldFirst on the company blog said the efforts invested by UK SMEs to extend beyond “their Brexit blues” and their ability to “develop coping strategies to push their exporting aspirations forward” is compelling for both domestic enterprises and foreign markets in trade.

The first quarter of 2018 demonstrated overseas transfers worth £48,000 as a result of international trade which is up five percent from the last quarter of 2017. China and the United States have ranked steady on the index for imports and exports post-Brexit this year. The United States is perceived as an attractive target to establish trade for UK SMEs. Currently, the number of SMEs doing business in the United States stands equivalent to those companies trading with Western Europe. Because of the distinct market opportunities beyond the European Union, only 20% of the companies plan to magnify their European exports while 62% of them want to expand their export base to the United States.

Of the ten markets that witnessed the highest growth in payments from UK SMEs early this year, seven countries are located outside the European Union: Turkey, Norway, Morocco, Singapore, Russia, Indonesia and the UAE.

Why the post-Brexit is good for SMEs“The UK Government has not been shy in promoting the benefits of building a nation of exporters over the last year, but this survey shows that more needs to be done to support our smaller businesses,” Cook concluded, “These SMEs will be our global exporting pioneers post-Brexit and it is vital that the Government and wider industry does all they can to support them. This could mean anything from facilitating connections between UK small businesses and foreign counterparts, to offering advice and training on how to do business and communicate with international trading partners.”

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