Over half of SMEs are unprepared for Brexit despite another missed exit date
Over half (54%) of the UK’s SMEs, equating to 3.1million* businesses, admit they had not prepared in any way for Brexit ahead of the 31 October deadline according to the latest Q3 SME Confidence Tracker from Bibby Financial Services.
Fewer SMEs are investing and the amount they are investing on average has also fallen. The research shows that the number of SMEs investing (69%) is 11 percentage points lower than the same time last year (80%).
Average investment spend is also down for the first time this year as SMEs plan on average to invest £69,000 over the next 3 months. Investment spend has waned in 2019 as uncertainly has reduced SMEs appetite for risk. Before the EU referendum in Q2 2016 SMEs were on average investing over £100,000.
Of those not investing at all, over half felt that they were being held back by the uncertain economic environment in the UK and unpredictability arising from the UK’s exit from the EU.
SMEs have responded to Brexit uncertainty with defensive measures that were also seen in Q1 2019. These included building up cash reserves (20%), stockpiling goods (15%), renegotiating agreements with suppliers (15%) and exploring options to manage currency volatility (14%).
With uncertainty limiting appetite to invest in expansion and growth, 59% of SMEs across the UK believe there will be a recession within the next 12 months. In line with this prediction, the overall SME Confidence Index fell slightly to 61.19.
The Charter provides a framework for financiers to outline specific commitments to SMEs in relation to preparing for Brexit and was adopted at the Business Finance Council’s first meeting on 9 October. The Business Finance Council is co-chaired by Business Secretary, Andrew Leadsom and Economic Secretary to the Treasury, John Glen.
*Extrapolation based on 54% of ONS population of 5.7million SMEs in the UK