Brexit business concerns hittng close to home for UK SMEs

The fall-out from Brexit negotiations are leaving SMEs even more unsettled this year, with new research from Scottish business advisers and accountants Scott-Moncrieff showing, 78 per cent of SMEs are concerned about the UK economy, as opposed to only 28 per cent having concern about the global economy.

The findings of the firm’s ‘SME Insights’ survey represents a significant jump in figures from last year, when 68 per cent said their chief concern was the state of the UK economy. In terms of the underlying reason for their concerns, 51 per cent said that the impact of the Brexit negotiations loomed large. Common concerns also included shortages of skilled staff and the threat of cyber-attacks or data breaches have been front of mind with most businesses due to the GDPR deadline.

Gareth Magee, partner at Scott-Moncrieff, says that this year’s research shows the Government has a long way to go in assuaging business concerns over Brexit: “The research tells us that concerns about Brexit are still looming large alongside worries about exchange rates, interest rates and competition – all issues that stem from or are impacted by the Brexit negotiations. Even SMEs that do not trade abroad say that Brexit is still having an impact on their businesses through a decline in spending or skills shortages which could both see the volume of work slow.”

As an alternative to hiring, many SMEs have turned to training up internal talent, which will go some way to addressing the skills shortage that 41 per cent reported as a key issue.

Mr Magee continues: “There is a real concern, no doubt enhanced by the uncertainty around Brexit, about attracting and retaining skilled staff. However, a consistent theme, from this and our previous reports, is that SMEs are tackling the skills shortage from the inside, by investing in staff training and developing the people they need to keep growing their businesses.”

Technology issues are also causing concern. 29 per cent of SMEs are concerned about the threat of cyber-attack or data breach and 27% are worried about keeping pace with and adopting new technologies.

Fraser Nicol, technology partner at Scott-Moncrieff, said: “SMEs are genuinely worried about the impact that improvements in technology will have on their sector and business – whether they will be replaced, or left behind, and whether they can afford to invest to keep pace.”

Despite concerns, the survey revealed remarkable resilience, with 40 per cent of SMEs performing better than expected last year. Encouragingly, SME confidence in the short-term future has bounced back, with business owners working towards achieving their targets by being innovative and creative. What is not clear, concludes Gareth Magee, is whether this is the calm before the storm: “In 2019 we will finally leave the EU, and the prospect of lower economic growth as a result has SMEs concerned, and rightly so. However, a willingness to invest in new technology and find innovative ways to answer skills problems are heartening, showing that UK SMEs still have extraordinary spirit and will to succeed despite some of the bigger issues they face.”