When the Conservative Party was returned as the largest Party in the UK General Election last May, it put Britain’s involvement in the EU firmly on the agenda; especially as the United Kingdom Independence Party (also known as UKIP) also polled well. With the date of the referendum now set for 23rd June, both the ‘In’ and ‘Out’ campaigns are in full swing. But, what could happen if Britain left the EU (a Brexit)? In this post we look at how it could affect businesses.
Big Business vs Little Business?
In truth, there is very little that can be done to accurately ascertain the exact impact of a Brexit on British businesses. However, a number of companies have also urged Britain to leave the EU, with 200 small businesses signing an open letter urging Britain to leave the EU, stating they felt that “flexibility and adaptability are key to our long term successes.” The letter goes on to state that:
“Recently much has been made of the support given for our continuing membership to the EU by a minority of managers from Britain’s largest companies.
But little attention, as ever, has been given to the stance of SME’s in this debate. SME’s are the incubators for tomorrow’s success stories.
Our businesses thrive because we instinctively understand that flexibility and adaptability are key to our long term success. We employ the majority of the UK’s workforce.
As entrepreneurs, we deal with the EU’s constant diet of unnecessary regulations which add to our cost base, reduce our bottom line, and raise prices for our customers for no return.
If EU institutions are tone-deaf to the genuine desire for change to remain competitive, the EU is destined to fail.
We believe in the future of our country. We believe that our economy can do better and create more jobs, without being held back by the EU, thus we should vote to leave.”
However, it should also be pointed out that a number of larger businesses, including some major FTSE 100 companies, have also signed a letter stating that Britain should vote to remain.
Speaking generally, it appears that the EU referendum has become a battle between businesses. Larger corporations are on the ‘In’ side of the referendum, while smaller businesses are backing ‘Out’.
Most Businesses Don’t Want to Speak Out
The Financial Times has reported that although an increasing number of British boards are uneasy at the thought of a Brexit, most businesses are unwilling to speak out on the prospect. According to ICSA, a governance body, 61% of businesses who responded to their survey revealed that EU membership had a positive impact on their business. This is a figure that has increased by 19% since December 2013.
What Might Happen?
Of the business owners who responded to the ICSA’s survey, 70% said that if Britain left the EU it would cause “some” or “significant” damage to their business – this has increased by 7% since the summer. Only 28% believed that it would make no difference to them.
However, as The Guardian have reported here, there are very few reports quantifying what would happen to businesses in the UK if the UK was to vote to leave the EU as there are simply too many variables and hypothetical situations. However, preliminary research has concluded that “leaving the EU would be likely to impose substantial costs on the UK economy and would be a very risky gamble”. We will have to watch the debate evolve over the coming months.