What mid-market businesses really think about Brexit
The country’s exit from the EU is the defining issue of our time, impacting on every business sector and affecting the fortunes of our economy now and in the future. In February 2017, against this uncertain backdrop, we carried out research with more than 400 UK mid-market businesses and a further 54 from across European Union member states to learn more about business leaders’ sentiment around Brexit.
The research reveals how confidence is high amongst British business leaders as they expect to prosper from Brexit, but warns that they are unprepared and lack robust plans, are overly ambitious about brokering new trade deals, and are heavily reliant on migrant workers to fill a widening skills gap. The message from this research is loud and clear – uncertainty is simply getting in the way.
UK business leaders need immigrant workers
With immigration being one of the deciding and key factors that led to the ‘out’ vote on June 23rd, UK business leaders are now painting a stark picture of the increasing reliance on the migrant workforce and the role they play in filling the skills gap. Almost three quarters (74%) agreed that businesses require immigration to fill the skills gap, and over a third (39%) want a reduction in ‘red tape’ in this regard. In addition to this, nearly two thirds (63%) of UK leaders are expecting the flow of skilled workers into the UK to decrease and more than half (60%) saying that migration restrictions will make the UK labour market less flexible to demand. Overwhelmingly, the research concludes that restricting immigration will damage prospects for businesses and their workers, and is patently unrealistic.
A new hope for new trade?
A clear and consistent message was that leaders believe that Brexit’s biggest risk relates directly to trade with more than two thirds (68%) of leaders believe that Brexit presents them with the freedom to strike new trade deals. However, this optimism is tempered somewhat by the responses from the EU panel with over three quarters (79%) warning that the UK has overestimated the EU’s willingness to accommodate its requirements. There appears to be a more telling story with the majority (78%) believing that the costs of imports will be a negative force, with just less than three quarters (71%) believing that the loss of access to parts of the single market is a further detriment.
Underprepared for Brexit
The research found that British leaders’ were slow to implement plans and reticent when it came to taking positive steps towards being Brexit-ready. Nearly two thirds (61%) say they hadn’t set up a Brexit task force to address the outcome of Article 50. Many businesses claim they don’t know what they are preparing for, what to expect, and how to implement plans when the majority of information from government isn’t definitive about implications. Businesses are operating in a vacuum caused by this state of uncertainty and the fog isn’t expected to clear anytime soon.
The split in Brexit preparedness is increasingly evident when it comes to the makeup of the businesses surveyed. Private equity-backed enterprises were more progressive and taking ready steps to deal with implications with over a third (35%) having actioned plans already, whilst just less than a quarter (20%) of family-owned operations claim they were considering changes.
UK independence Vs influence?
Nearly three quarters (73%) of British business leaders believe the UK is strong enough to be independent whilst their European counterparts don’t think UK will get its way over the negotiations. Research delved into what business leaders thought the UK’s level of influence would be post-Brexit and less than half (41%) of leaders believed it would increase after the UK leaves the union. Across the continent, nearly two thirds (59%) of European business counterparts believe that the UK’s level of influence will reduce, and one third (33%) believe that the UK simply isn’t strong enough to be independent of the Union.