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SMEs anticipate little impact if free movement of labour restricted

Martin Greenland | 07:28 Wednesday 17th January 2018

Almost nine out of 10 SMEs in the UK (86%) will either benefit or feel little to no impact if free movement of labour is restricted post-Brexit, according to new research.

These figures were revealed in the quarterly Close Brothers Business Barometer, which surveyed close to 1,000 UK and Republic of Ireland SME owners and senior management across a number of sectors.

Neil Davies, CEO at Close Brothers Asset Finance, said: “While this result might be surprising to some, it's important not to forget that a significant minority (14%) of businesses feel they will actually suffer.

“And it becomes even more nuanced when unpicking the detail: for example, businesses with a turnover of over £10m feel they will be more affected than smaller organisations, with 26% feeling they will be negatively impacted, against only 5% of firms turning over less than £250,000.

“From a sector perspective, it comes as no surprise that the transport and logistics sector stands to be the most affected (23% 'suffer'), since European drivers are currently propping up the shortfall in UK drivers.”

Almost a fifth (18%) of UK businesses depend on non-UK labour to operate effectively.

This figure increases to 36% for London-based companies.

Neil added: “Bigger firms in the SME market are the most reliant on non-UK labour and appear to have the biggest vested interest in understanding what is being done to ensure the rights of non-UK workers.”

Question: Does your business rely on non-UK labour to run effectively? (based on turnover)

 

Some 29% of firms believed that Brexit would cause an increase in labour costs, against 7% of firms who felt it would decrease.

However, the remaining 64% believed that it would remain unchanged.

“These results reflect the uncertainty currently being felt by SMEs,” Neil concluded.

“No one currently knows how the cost of labour will be affected, but again London businesses are the ones bracing themselves for an uplift in cost, with 45% expecting them to increase.

“Interestingly, the results for Wales mirror those of London.

“From a sector perspective, nearly half (48%) of print firms are expecting a labour cost increase.”

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