A third of the 1.1 million UK SMEs with EU suppliers would be unable to operate without imports from the bloc, according to the latest SME Confidence Tracker from independent financial services provider, Bibby Financial Services (BFS).
The research news comes as a potential ‘no-deal’ Brexit threatens to disrupt trade between the UK and EU, and discussions around immigration and single market access continue to dominate political agendas. As the Brexit deadline looms closer, these findings reinforce the need to make trade and support for UK import operations a top government priority.
The research also shows that three-fifths (61%) of UK SMEs that import from the EU would expect profits to fall if they could no longer access the EU single market, further demonstrating SMEs’ current reliance on EU suppliers for survival and business growth.
Worryingly, more than half (55%) of businesses would struggle to find alternative suppliers outside of the EU, emphasising the importance of securing a Brexit deal that prioritises trade and considers import policy, at October’s EU Summit.
Edward Winterton, UK CEO, Bibby Financial Services said“Brexit threatens to completely derail the streamlined importing processes the UK has in place, which many SMEs rely on to source the goods they need to survive and thrive. Historically, imports haven’t had the same focus as exports when it comes to the UK’s trade targets. It is time eyes were opened and importing recognised as equally important for SME survival. Unless importing rises higher up the Government agenda, the survival of SMEs could be put at risk. ”
“If a poor, or no deal, becomes a reality we can expect an increase in customs paperwork and delays at ports, all of which would be catastrophic for SMEs reliant on imports. As it currently stands, business owners are faced with having to prepare their supply chains for the unknown. SMEs need to see the Government recognising their concerns, or else we risk sleepwalking into a nightmare”.
In addition, recent research by the British Chamber of Commerce and BFS found that almost two-thirds (62%) of UK SMEs have not done a risk assessment on the impact Brexit could have on their business.
Although SMEs started the year with a rebound in confidence as a result of progressive negotiations with the European Union, the latest figures also suggest that ambiguity surrounding Brexit is dampening their spirits, with the UK’s uncertain economic environment overtaking rising costs as the most significant barrier to investment in Q3. As a result, confidence has dipped for the second consecutive quarter, from 61.4 in Q2 to 60.8 in Q3 2018.
Winterton added “We started the year with a degree of cautious optimism, but since then confidence has plummeted as Brexit negotiations have stalled. Unless significant progress is made this month, this is likely to remain the case.
“It’s been said countless times, but SMEs need clarity on what the future trading environment will look like post-Brexit so that they can prepare and focus their efforts on business survival and growth.”