11 Mar 2019

4 in 10 SMEs believe they will go out of business within 1 year of ‘no-deal’ Brexit

M7 Real Estate (“M7”), one of the UK’s largest SME landlords, reveals in a national survey of 1,084 UK SME business leaders that 45% of UK SMEs fear that they will go out of business within one year with their current corporate set up in the event of a ‘no-deal’ Brexit, with 32% even considering closing their company.

Nearly two-thirds (63%) of SMEs predict that they may not survive for more than five years if they take no action in the event of a ‘no-deal’ departure, with there being a clear personal preference (54%) for remaining in the EU under the terms of the UK’s original relationship.

The SME leaders surveyed represent a gross total of £7.491bn in turnover from over the last 12 months and directly employ a gross total of 100,537 full-time staff. According to the National Federation of Self Employed & Small Businesses , the combined UK annual turnover for SMEs at large in the economy was £2.0 trillion in 2018 (52% of all private sector turnover), with SMEs employing 16.3 million people; 60% of all private sector employment in the UK.

Other key survey findings include:

• Just 1 in 10 (11%) SMEs believe a hard Brexit is in the best interests of their company, with 58% concerned about the impact on a ‘no-deal’ on their turnover.

• 59% are not fully prepared to leave the EU without a deal.

• 43% are expecting a negotiated agreement to pass at the end of March 2019, 23% think the UK will revert to the original relationship, 19% foresee a ‘no-deal’, while 15% believe negotiations will continue and Brexit will be postponed.

• 68% of SMEs support a second referendum. If given the choice: 43% would vote for the original relationship, 35% for a negotiated agreement; 15% for no-deal and 7% wouldn’t vote.

• 6 in 10 do not feel fully informed about the potential impact on their employees (62%), clients/customers (63%) or their supply chain, (62%), with 46% claiming they haven’t received communication from the UK Government to prepare their business for a ‘no-deal’.

• SME leaders rated the UK Government’s negotiations as: ‘brilliant’ (12%), ‘good (23%), ‘average’ (26%), ‘poor’ (18%) or ‘pathetic’ (21%).

• One-fifth (18%) of SME leaders also stated that they would vote for a ‘new centrist party’ if there was such an option in the next UK General Election.

• SMEs in London are more under threat of closure within 1 year if they take no action (51%), than those outside the capital (43%).

Richard Croft, Chief Executive of M7 Real Estate, commented, “These robust statistics underscore the serious anxieties that exist across the SME community at large, about the threatening impact of a no-deal Brexit. With potentially significant consequences for our vital 3,618 UK commercial tenants, these figures reveal a significant absence of appropriate Government ‘no-deal’ communication, leaving many SMEs in a continued state of ambiguity. This latest data further confirms the highly uncertain impact that a no-deal Brexit will have on the turbo-engines of the UK’s economy.”

“We commissioned this independent national research as one of the UK’s largest SME landlords having continually heard feedback from our tenant base that they feel their concerns are not being listened to. The results bear that sentiment out and highlight the perceived recklessness of moving to a WTO / no-deal Brexit amongst the SME community which is a hugely important generator of employment across the whole UK.”