There is general agreement that entrepreneurs are the lifeblood of the British economy – they create the jobs and wealth needed to keep things running. That’s why it’s important to look at how they are being affected by Brexit.
One person who deals with them on a regular basis is Guy Rigby; he heads the Entrepreneur Services Group for the professional and financial services firm Smith and Williamson, which brings together accountancy, tax and corporate finances to support owner-run firms. He’s also the author of the acclaimed book From Vision to Exit, a guide for those setting up their own company.
The immediate impact of Brexit depends “on who you are”, says Rigby, especially in terms of your relationship with the rest of the world. “Those who buy goods and services from overseas have been hit by the falling pound, since they will now be more expensive”, he says. But if you are selling abroad, “then the fall in the value of sterling will have made your products cheaper, so in theory you should be doing well. Overall, most small entrepreneurs have been relatively unaffected if they trade locally or in the UK, since domestic demand is key to their success”.
However, “there has definitely been a wobble in confidence”. While individual entrepreneurs “are still optimistic about the prospects of their own company, they are not happy with what’s happening around them”, especially in terms of all the political uncertainty. This split between “micro-confidence” and “macro-pessimism” is shown in the results of a recent survey conducted by Smith and Williamson. On the positive side, it revealed 78% of business owners are planning to expand their company, either through organic growth or by making an acquisition. However, only 37% believe that the economy will improve.
Of course this pessimism about the direction of the UK economy is about “more than Brexit”. However, one big Brexit-related that many of his clients have flagged up is its effect on their staff. The inability of the government to agree a coherent post-Brexit immigration policy is “destabilising” – there is “certainly evidence of EU staff going back to Europe”. This is due to two factors. Firstly, “many feel unwelcome in the UK”; but the “fall in the value of the pound is also important” since it reduces the relative value of their salaries compared to what they can get in the rest of the EU. Thanks to this “double whammy” many are “voting with their feet”.
In terms of specific industries, Rigby thinks that “consumer-facing sectors, especially leisure and retail, are particularly worried about the loss of staff”. Technology companies are also concerned about access to talent, and while there “haven’t been any big wholescale moves to continental Europe, a small number of companies are setting up operations in Europe in order to ensure market access”. While he is “not aware of any companies being directly approached by European cities” he thinks that Ireland’s “common language” makes it an “obvious choice”. Indeed, “US and Australian firms are already saying that they are thinking about Dublin as an alternative to London”.
Overall, Rigby thinks that, “a transition period of several years between leaving the EU and any permanent trade deal would definitely help matters”. This is because the consequences of a cliff-edge exit out of the single market and customs union would be “unthinkable”. He also warns that getting a decent deal “will take a lot of time” because “there are a lot of issues that need to be resolved”. One positive sign is that, from what he has heard, “the idea that a bad deal is worse than no deal is fortunately going out of the window”.