UK Prime Minister Theresa May triggered Article 50 in March this year to begin the UK’s two year departure from the European Union. Although the decision was the result of a democratic referendum process, the initial ‘Brexit’ result was a nasty shock to many. Although the intensity of the initial backlash has now begun to settle, huge question marks still hang over how the process will pan out, and how Brexit will affect Britain over the short and longer term.
Brexit and the Backbone of the UK Economy
A significant cause for concern is how Brexit will affect business for Britain’s Small and Medium size enterprises (SMEs). SMEs make up nearly half of the UK’s private sector turnover and so are of vital importance to the UK’s economy. How SMEs fare over the next few years will help to indicate how Brexit is affecting the UK as a whole.
Despite a feeling of uncertainty still surrounding the Brexit process, SMEs are confident about post-Brexit business. In the lead up to the referendum, a cornerstone of the Brexit argument was that it would cut Brussels red tape, which has been viewed as stifling many industries. It appears that businesses are now feeling ‘freed of the shackles’ of Brussels, and are now looking to take advantage of international growth prospects.
EU Trade Talks
Whilst there is a sense of cautious optimism from many UK businesses, the government has a long way to go in terms of negotiating positive trade deals worldwide. It will be crucial to the UK’s post-Brexit economy to see growth in exports (and therefore improved prospects on the world stage). This will be largely dependent on maintaining free trade with the EU. The danger of losing free trade through Brexit was a central part of the ‘Remain’ camp’s message to voters. Because there is no ‘model’ for Brexit (no country has ever voted on leaving the European Union), it is a huge step into the unknown for the UK. However, a ruling from the European Court of Justice in May improved Britain’s Free Trade prospects; the ruling will effectively mean there are less bureaucratic obstacles for the UK to achieve this. So Free Trade with the EU is still very much on the cards for British SMEs. However, without it, one of the Government’s long-term plans for the UK economy (the aim to export £1 trillion by 2020) will most likely fail.
The UK Has Faith in its SMEs
The UK government’s 2012 plan to achieve £1 trillion in exports by 2020 is ambitious, but also shows its confidence in SMEs to be able to deliver it; it therefore makes sense that the government will do all it reasonably can to help businesses on this journey – be this through Brexit negotiations, or through incentivising overseas trade.
Industries Offering Hope for Brexit Success
Chemicals, cars and aircrafts, art and medical technology are among the biggest grossing exports for the UK economy. However, SMEs also make a substantial contribution, with many specialist products – particularly food and drink – being popular overseas. Scotch whisky exports topped £1bn for the first time this year, indicating substantial international growth in luxury markets. Other UK alcohols – particularly Beers – are doing well on the world stage. Part of this growth can be attributed to the recent upturn in popularity for micro-breweries. Despite the growing popularity of e-books, the physical book is also holding its own – and exports from the UK are on the increase. Computers and computer components are also high on the list of UK exports.
With so many aspects of Brexit still uncertain, it is encouraging that the UK government remains bullish on its £1 trillion export target. International parcel couriers are ready for the challenge.