SMEs could be worst affected by Brexit

New academic research has suggested that small and medium-sized businesses (SMEs) may be worst affected when the UK leaves the European Union.

In the first such study of its kind, researchers at the University of St Andrews examined the potential impact of Brexit on UK SMEs, reporting that Brexit is likely to result in lower levels of capital investment, reduced access to external finance, lower levels of growth, reduced product development and lower levels of business internationalisation. Future plans for capital investment within innovative SMEs also seem particularly likely to be negatively impacted.

Moreover, the research revealed that Brexit-related uncertainty is likely to affect larger, export-oriented firms and those operating in hi-tech and service-related industries the most.

Dr Ross Brown, lead researcher, said: “The results of our analysis suggest that Brexit-related concerns could result in a range of negative consequences for UK SMEs, especially the impact on reduced capital investment, which critically weakens and undermines their ability to grow and prosper.

“Most worryingly, these perceived negative impacts appear to be foremost in the minds of entrepreneurs and managers located in the types of innovative and export-oriented companies, which are often viewed as the high growth ‘superstars’ of tomorrow. In other words, SMEs thought to be the most significant for boosting productivity and economic growth may be the most negatively affected by Brexit.”