Most Scottish SMEs want to hit Brexit reset button

While the latest Citibase Business Confidence Index survey showed 70 per cent of London-based businesses expressing the most confidence in the government’s ability to secure a good Brexit deal, Scotland was the least confident region in the UK, with nearly as many (63 per cent) not confident in a favourable outcome.

Following sustained political and economic uncertainty, the survey found 61 per cent of UK SMEs would like to reverse the Brexit process and retain membership to the EU.

The survey of 1,059 SME decision makers by Citibase also reveals that 78 per cent have seen revenues either increase or stay the same since the decision to leave the UK, up from 75 per cent one year ago, suggesting that pockets have not yet been hit as hard as many would have anticipated.

Despite this, some SMEs (37 per cent) have reported struggling to raise funding or attract investment, an issue that is most prominent in the North East (64 per cent). Equally, just under half (49 per cent) of SMEs are delaying investment decisions until an outcome is reached.

As spring approaches, the green shoots of optimism are starting to show, with 50 per cent of those surveyed (2017 Q2=44 per cent, Q3=35 per cent, Q4=33 per cent) now confident that the government will negotiate a good deal with the EU for UK SMEs.

Mirroring this, 53 per cent think that the UK has been effective so far in its initial Brexit negotiations, a figure that is particularly pronounced in London (75 per cent) and the North East (73 per cent).

This figure drops to a mere 19 per cent in Scotland and 25 per cent in Yorkshire, highlighting strong differences of opinion across the UK.

During this period of uncertainty, cost-conscious SMEs are continuing to seek short-term flexible office contracts, with almost three quarters (72 per cent) stating that they want terms of less than three years. This has risen dramatically since the 2017 first quarter survey (Q1 = 57 per cent), and is particularly prominent in the North East (83 per cent) and London (81 per cent).

In terms of office priorities, ‘flexible, short term contracts’, ‘high speed internet’ and ‘the ability to easily change the size of our space’ ranked as the three most important features (42 per cent, 74 per cent and 41 per cent respectively) when it comes to choosing an office. Despite grabbing the headlines as an alleged trend, the ability to hot desk and additional ‘lifestyle facilities’ such as an on-site bar and leisure spaces ranked very low, highlighting that what SMEs really need are functional spaces with flexible contracts that allow them to flourish, without the costly extras.

Despite internal leadership challenges and a Cabinet reshuffle which was met with a mixed response, Theresa May is still the most popular choice as the best suited leader to represent the UK in Brexit negotiations (26 per cent), with an impressive 42 per cent of Welsh SMEs giving her the vote. Boris Johnson and Jeremy Corbyn are now in joint second at 12 per cent each, while in Scotland, Nicola Sturgeon is the most popular choice for the first time with 23 per cent of votes, having overtaken by just 2 per cent Theresa May, who was Q4 2017’s most popular choice.

Despite stepping down from UKIP, Nigel Farage received a number of votes, as well as Richard Branson, James Dyson and even Popeye – suggesting that SMEs would like to see someone who has run a business at the helm of the ship.

Steve Jude, Citibase CEO, said: “While on the surface confidence levels are up, the message from SMEs is clear – they would prefer to not be in this Brexit situation at all, as evidenced by 61% wanting to press the reset button on the entire process. As a result, these SMEs are cautious about the future and don’t want to commit to anything that may stifle their success, such as long-term office contracts that don’t allow them the flexibility they crave to be agile, successful businesses.”

“2017 also gave rise to the general trend of larger corporates taking flexible office space, showing that the benefits of agility and flexibility are wide-reaching, whether you are a small start-up or an established entity. Demand for flexible offices is continuing to soar across the country as businesses wake up to the flexible working revolution. Smart building owners can also benefit from this revolution in occupiers shunning traditional office leases, by turning to flexible providers like Citibase that can transform their underused spaces, whether single floors or entire buildings, into profit generating assets that support UK businesses.”