WARR & CO ACCOUNTANCY BLOG
Whether you voted ‘Remain’ or ‘Leave’ the verdict is in and a course of action has begun which will forever change the way we do business in the UK. But what does Brexit mean for Contractors, Freelancers and SMEs. In our latest blog, we take a look at the good, the bad and the unknown that may affect contractors, freelancers and SMEs in the UK.
Brexit for Contractors, Freelancers and SMEs
Firstly, let’s stress that it takes time to un-stitch our nation fro the EU, nobody should expect any instant changes and we need to have every faith that our Government will do what’s best for the country.
Secondly, there’s a lot of legislation to be re-writen, much of which will affect all UK businesses. It could take up to 10 years, while that’s a long time, in terms of the new laws that we’ll see come into affect, it’s likely you will see frequent changes. Currently the EU dictates legislation on all sorts of things that will affect most UK businesses, such as employment rights, international trade and VAT. See the full list here: http://www.eubusiness.com/topics/eulaw/summaries
For the self employed Freelancers and Contractors – the big question that immediately springs to mind is, ‘Will businesses spend money hiring me?’. There are two arguments here, initially the fear is that the economy will be in trouble, so businesses may want to spend less. However, in a time of instability, many larger businesses may choose to opt for the temporary solutions that contractors and freelancers offer. The long-term implications are that some Europeans living and working in the UK may decide to leave, resulting in increased demand for highly skilled contractors and freelancers.
“We have witnessed in the run up to this referendum that demand for contractors has been high and I see this demand increasing particularly if the rules on immigration tighten up,” – Julia Kermode. CEO of Freelancer and Contractor Services Association
“IPSE believes this new era can and must be taken as an opportunity for the UK. Priorities should be new global trading arrangements, cutting burdensome regulation on small and micro-businesses and ensuring that Britain has the most flexible and attractive economy in the world. With these priorities, the UK can be a place where freelancing and contracting can thrive. New circumstances always bring new opportunities for freelancers.” – Chris Bryce. CEO IPSE
On the flip side of this, there are plenty of British contractors and freelancers who are currently working on the Continent. They may find that they are not eligible to stay in the EU resulting in an influx of these skilled individuals back into the UK.
For SME businesses, the outlook could be a little more turbulent thanks to a large quantity of unknowns. If your SME exports internationally, you may be a little more nervous post-Brexit, while being independent of the EU will by no means make it impossible to trade internationally, there may be delays ahead. Similarly, if your business manufactures in the EU you will have reason to be concerned thanks to import tariffs and mark-ups – the big questions being, can the UK’s manufacturing industry bounce back and support the economy?
In terms of finance, as finance is often granted by local retail banks, we would expect to see some effects – with the overall legislations changes and the expected economic and financial repercussions affecting banks. If EU banks find it more difficult to support British businesses due to legislation restrictions, we may see competition for finance increase. One expected boost to SME businesses in the UK is likely to be halted as a result of the Brexit result, the European Investment Bank had planned to lend £100m to our small businesses.
SMEs throughout the UK seemed to be split between Remain and Leave with different types of business expecting to be affected by the decision in different ways, click here to read a few quotes from SMEs on their Brexit decisions.
However there will be benefits for small businesses that will come in the form of reduced regulations and red tape previously provided by the EU. While these benefits will not be immediately felt, it’s likely that UK SMEs will have to buckle up and ride out the storm before feeling the benefit.
“Small businesses need to prepare for a period of volatility as markets react. Gains in terms of reduced regulation and EU membership costs may follow, but are probably some years off.” – Stephen Roper. Professor of Enterprise and director of the Enterprise Research Center at Warwick Business School
We are stepping into a phase of uncertainty, but the important points to take from this blog are that changes will not be immediate, there will be turbulence, but there will be benefits on the horizon. If you have concerns about Brexit for Contractos, Freelancers and SMEs please contact your accountant at Warr & Co to discuss your business’ financial and strategic position. If you’re not a client of Warr & Co, call us for a free no-obligation consultation on your business and it’s future. 0161 477 6789 / 02031 741 436