On the morning of June 24, the UK woke up to the news that 52% of the population had voted to leave the EU. Months later, and Britain is preparing to sign the dotted line on its formal ‘divorce’ papers, and surrender its status as a member state.
While the pound did drop to the lowest rate seen against the US dollar in more than 30 years, some economists maintain that the Brexit vote represents an exciting new era for British SMEs. Yes, there are genuine concerns that SMEs should be counting every penny until the Brexit dust settles. But according to the latest research from Visa UK, SMEs could be on-track to enjoy a host of benefits in the face of the UK’s departure.
Visa UK confirms fiscal silver lining
While consumer confidence studies predicted a slump in spending, Visa UK reported a significant post-referendum spike, with face-to-face expenditure increasing for the first time since April. Analysts foresee this as a revival of the high street retail economy, with the company’s managing director commenting, “Looking at the sectors, the longer term trend we’ve seen for increased spending on leisure and recreation is enduring.”
Borderless ecommerce means exporting could become a more viable option for SMEs, with leading economists maintaining that departing the EU could open up more opportunities for lucrative trade deals beyond the region.
“Europe is run in a top-down way in that is driven in the interests of big companies and against the interests of small businesses…It takes an agonisingly long time to secure trade deals with the EU because there’s always one country that objects,” comments celebrated author, journalist, TED Talk speaker and business leader Viscount Matt Ridley.
So, amidst post-Brexit doomsday predictions, it seems that SMEs could actually be better off. Rather than snowball into business paralysis, benefits are quickly starting to materialise…
So how can SMEs ride the Brexit wave to their advantage?
As stressed by pro-Brexit economists, the ‘divorce’ could be the catalyst that’s needed to fire British SMEs into the international market. Now is the time to flirt with the idea of international expansion, and take advantage of the undervalued pound.
Prepare for government reform
In the wake of Brexit, there’s been increasing pressure on the British government to support SMEs. CBI is at the forefront of the movement, releasing five key points that it believes May and her newly formed BEIS cabinet must prioritise. This includes retaining tariff-free access to EU markets, as well as making it easier for UK businesses to establish a presence in non-EU countries.
“The principles are clear: businesses want to continue trading easily with EU neighbours while bringing down barriers to new opportunities around the world,” comments CBI’s chief executive.
Don’t rely on local fintech
“Keep calm and move to Berlin”
This is the tagline that the German capital is pushing in the wake of the Brexit vote. Berlin is a powerhouse of fintech services, securing 10 major deals in 2015 worth an estimated £61 billion. Thanks to a thriving fintech scene, government funding and commercial real estate that costs a fraction of prices seen in London, it’s emerged as an appealing option for British based fintech companies wanting to bail off the Brexit bandwagon. With Germany fiercely poaching cutting edge fintech start-ups, relying on local fintech providers isn’t a canny move for SMEs.
Consider alternative finance
While Britain’s fintech scene may be suffering, it’s by no means a crippling blow for SMEs. The UK referendum may have displaced both the pound and the financial services industry, but for alternative capital providers Brexit marks a kaleidoscope of opportunity. With banks set to remain ‘unfriendly’ to SMEs, alternative lending is set to emerge as an exciting new way for small businesses to secure finance. As alternative funding solutions like GapCap aren’t funded by traditional means like deposits, interest rates and central banks, they’re largely immune to the fiscal disadvantages of Brexit. This means they can continue to offer fast, short-term secured access to finance, as and when it’s needed.
The final verdict? While Brexit wasn’t ideal for the short-term outlook of Britain’s economy, the long-term benefits are already starting to materialise. For SMEs that play their cards right and embrace the EU departure, opportunities could roll in fast, and hard.