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4Syte on Brexit: Will SMEs adapt Deal, No Deal or Remain?

By Nick Sellars, Group Managing Director

As if you hadn’t heard enough about Brexit, I’ve been asked to throw down a few lines about what I think are the possible consequences for SMEs as a result of Brexit. I’ve also been told that I shouldn’t be too political in my comments. This of course can be quite difficult because the subject can be quite emotive, whether you are for or against or maybe have changed your view along the way. Or you may think it’s the right thing to follow the democratic vote and support leave. Clearly politicians in the main have not followed the latter principle, hence the delay and impasse which persists as I write.

It’s also interesting to hear regional arguments. Ultimately peoples’ arguments are mainly, and unsurprisingly, affected by how it will affect us as individuals. As a business it’s interesting where we at 4Syte sit geographically. Our Central London office would be in a ‘remain’ area, our Chelmsford office in a ‘leave’ area, and our Leeds office marginally ‘remain’ but surrounded in West Yorkshire by a sea in favour of Brexit. By and large, and in percentage terms, popular opinion would suggest the overall opinion hasn’t changed a great deal, and despite being told condescendingly by certain politicians that the folk who voted leave didn’t know what they were voting for, many leavers opinions remains resolute.

A huge proportion of the population are just desperate for a resolution either way; just make it stop!!! It’s not helpful for business. Most businesses, particularly SMEs, are light on their feet and naturally adapt to the environment in which they find themselves. The better managed ones will probably cope better; some will have choices between a rock and a hard place, whilst others will also have real choices as to how they proceed. In a total ‘no deal’ scenario, one would imagine that the Government and the Bank of England would propose monetary and fiscal policies that would help with the change. This would likely incentivise foreign investment and protect supply chains for UK products, and also provide an economic climate which assists business and people. That scenario should also apply for a managed exit.

In the last couple of years, Invoice Finance for exports has increased tremendously. Guess why? To finance increasing exports because the price of UK goods is more competitive due to the weakened Pound. Imports on the other hand have naturally been more expensive. A kick in the teeth for many retailers which have had their margins squeezed and have also lost out to the general high street downturn in favour of online purchases. However, GDP has continued to rise and demand for goods the same, so overall our economy has done OK. As an Invoice Financier looking across our SME portfolio, there are always the usual mishaps, disasters and businesses losing their way, but by and large the mood and feeling has been one of growth leading up to today. In new business terms there is a huge appetite for borrowing for growth. Therefore, I’m tempted to say that amongst SMEs, none have been running for the hills in fear of a precipice of doom; on the contrary.

That could of course all change as Brexit day looms. Or will it be extended – who knows? There seems to be the will between the UK and EU (if you take away the emotion, politicising and name calling) to do a deal. Whether that will then be voted through in Parliament remains to be seen. If there is a deal I suspect it might, by the skin of its teeth, be with a helping push from the DUP. If there is a ‘no deal’ and there has to be an extension (unless there is a shimmy round the Benn Act which I doubt), then inevitably there will be a General Election. The odds can then be restacked.

But whatever happens, once the political bun fights are over and a decision – whichever way – is concluded, then commercial reality will step in, and that’s the time when proper business will be done. I have the utmost faith in UK business owners and entrepreneurs to step up and get on with it, adapt and prosper, and in time the economy will follow, unless the politicians interfere and put the kibosh on good old British enterprise. Whatever happens, 4Syte will continue to do its very best to support businesses; be there to discuss any problems or support success, and provide the necessary levels of finance to keep our businesses going.

If you would like to learn more about 4Syte you can do so by browsing our website. If you have questions about any of our finance services you can request a call back here.

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