Over half of UK SMEs admit they had not prepared in any way for Brexit ahead of the 31 October 2019 deadline, according to Bibby Financial Services.
The latest Q3 SME confidence tracker from Bibby Financial Services has shown approximately 3.1 million businesses in the UK failed to prepare for Brexit.
It also found fewer SMEs are investing than before. Seven in 10 (69%) of SMEs have made investments this year – 11 percentage points lower than the same time last year.
Average investment spend is down for the first time this year as SMEs plan to invest £69,000 on average over the next three months.
Edward Winterton, chief executive at BFS UK said: “Despite another Brexit deadline passing and a national awareness campaign by the government, SMEs have not taken action to prepare for Brexit. While we empathise to some extent with SMEs in this situation, failing to prepare leaves businesses on the backfoot in comparison to some of their peers which could have meaningful and long lasting effects on the health of their business. If the UK economy is to realise its potential then SME confidence must be restored through clarity from government.
“We have supported UK businesses for more than 35 years, and regardless of economic climate, we are absolutely committed to continuing this support in any way that we can. Last month, we pledged our commitment to the government-led SME Finance Charter reconfirming our support of SME’s now and in the future,” he added.
Prior to the EU referendum in Q2 2016, SMEs were on average investing over £100,000. Of those not making investments at all, over half felt they were being held back by the uncertain economic environment in the UK.
SMEs have responded to the political uncertainty with defensive measures also seen in Q1 2019 including building up cash reserves, stockpiling goods, renegotiating agreements with suppliers and exploring options to manage currency volatility.
Veenak International based in Birmingham has established itself as one of the UKs leading wholesalers in the healthcare space.
Their medicines, medical services and disposables like bandages and dressings are found in pharmacies and healthcare practices in the UK and Europe.
Shan Hassam group managing director of Veenak said: “As a wholesaler dealing with incredibly complex supply chains and regulation, there have been increasing pressures during this prolonged period of uncertainty. For Veenak and other businesses across the UK, there needs to be an element of certainty so we can better plan. We’re ready to meet new challenges head on, but more guidance to support SMEs through the process is needed, if we are to thrive.
“We’ve done our best to mitigate the risks by expanding our product line, restructuring our supply chain and opening up our offering to new markets – but predicting Brexit has made things harder,” he added.
As uncertainty is limiting appetite to invest, 59% of SMEs across the UK believe there will be a recession within the next 12 months. In line with this prediction, the overall SME confidence index fell slightly to 61.19.