Spring 2017 will see the UK begin to leave the EU, however the uncertainties about exactly how long this will take are yet to be confirmed. One thing is for sure, leaving the EU will impact businesses, large and small, across the UK and will likely even have a knock-on effect on countries worldwide.
Our Prime Minister, Theresa May, plans to trigger ‘Article 50’ by the end of March – which means businesses will have a very busy end of Q1 with the end of the tax season and the dawn of a new era. But triggering ‘Article 50’ does not mean everything will change immediately, it will take up to 2 years for the negotiations with the EU members to be finalised.
There are some changes happening already, however. The Autumn Statement (read our blog here) seemed somewhat Brexit-focussed to help prepare the UK in this critical year. One crucial decision that has been made is to cut corporation tax to only 17% in the hopes of keeping and attracting new business from overseas – this will see the UK having the lowest corporation tax in the G20.
The Government is being cautious in it’s growth forecast preditions, growth since the referendum has been better than expected, but the forecast for 2017 is only 1.4% (downgraded from 2.2%) and the Bank of England has followed suit.
Low interest rates from the Bank of England could really help smaller and start-up businesses, with interest rates at a new record low and incentives announced in the Autumn Statement, this could be a very exciting year for smaller innovative businesses.
Small businesses providing goods and services within the UK will have noticed minimal effects thus far, in fact we had a pretty positive end to 2016 in terms of spending overall. Businesses which rely on exports may have seen a little uplift with the weaker pound and vice versa for those who import goods or materials. These same businesses have a turbulent future ahead with trade agreements taking up to 10 years to finalise between the UK and countries remaining in the EU and beyond – so these businesses should prepare back-up plans over the next few years to find other ways to operate should their imports/exports be interrupted.
Small businesses may well find that slow economic growth and uncertainty make the landscape a challenge, they will need to focus on thinking outside the box with sales and marketing to take advantage of the economic environment ahead of them.
Contractors & Freelancers
Uncertainty has already led to many job cuts since the Brexit vote, with self-employment the highest it’s been in 40 years, post-Brexit Britain could see more competition or more opportunities for contractors and freelancers.
With self employed being the most flexible aspect of the UK’s workforce, it’s likely they will be in demand and many economists have stated that the self employed will be key to the country’s success post-Brexit. In fact, we’re likely to see more tailored financial options for self-employed people such as mortgages and loans, an area in which self employed people have often been neglected.
It’s not all good news for contractors, though. Since the Autumn Statement it’s apparent that the self employed business environment is going to become more complex, leading to contractors and freelancers needing more help to ensure they’re maximising their efforts.
Similar to the small businesses mentioned above, larger businesses in the UK will already have felt some effects in relation to import/export, unlike the smaller businesses, these larger businesses tend to have ‘forward contracts’ in place which protect the from fluctuations in the short term. However when these expire we may see a delayed impact affecting smaller businesses working alongside larger businesses, as well as consumers.
One of the biggest risks to the UK economy is now if many of these large businesses decide to leave the country, many are expected to make this key decision in the coming weeks and months. It’s likely we’ll see some remain and some leave resulting in several hundred thousand jobs being lost or relocated to the EU. London is likely to be the hardest hit, but this will have a knock-on effect across the UK.
One of last week’s big business stories was Snapchat choosing the UK as it’s Eurpoean base, demonstrating that large companies do still consider the UK to be the best location for them. Will others follow-suit?
In addition, the New Year brought some hope in the form of a letter to the Telegraph from the 5 biggest business groups in the UK, employing 13 million people in the private sector, who have pledged to work together to ensure post-Brexit success.
“We are committed to making 2017 a year of progress and success, and to working with the Government to shape a better economy…
“We the undersigned commit to play our part, working with businesses from all corners of the UK, to seize the opportunities and overcome the challenges that lie ahead.”
The Confederation or British Industry, British Chambers of Commerce, Institute of Directors, Federation of Small Businesses and EEF have all joined together in solidarity to help ensure the success of businesses across the UK, you can read the full letter here.
It’s sure to be an exciting year for the UK, but with solidarity and optimism Britain will endure.
If you’re concerned about the ways that Brexit may affect your business this year call our team for a no-obligation discussion about your company’s finances going forward. Stockport office: 0161 477 6789. London office: 02031 741 436.