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Research from St Andrews

SMEs ‘likely to be worst hit’ by Brexit

EU BrexitSmall firms are likely to be the biggest losers from Brexit, according to new research.

It says Britain’s withdrawal from the EU will lead to lower levels of capital investment, reduced access to external finance and lower levels of growth.

Academics at the University of St Andrews found it would also lead to reduced product development and lower levels of internationalisation.

The study of nearly 10,000 UK small and medium sized enterprises (SMEs) found that future plans for capital investment within innovative SMEs seem particularly likely to be impacted.

Dr Ross Brown, reader in entrepreneurship and small business finance at the University of St Andrews, said: “The results of our analysis suggest that Brexit-related concerns could result in a range of negative consequences for UK SMEs, especially the impact on reduced capital investment, which critically weakens and undermines their ability to grow and prosper.

“Most worryingly, these perceived negative impacts appear to be foremost in the minds of entrepreneurs and managers located in the types of innovative and export-oriented companies, which are often viewed as the high growth ‘superstars’ of tomorrow.

“In other words, SMEs thought to be the most significant for boosting productivity and economic growth may be the most negatively affected by Brexit.”

The analysis suggests that Brexit-related uncertainty is likely to affect larger, export-oriented firms and those operating in hi-tech and service-related industries the most.

Innovative SMEs in particular seem particularly concerned by Brexit. The study was carried out by researchers led by Dr Brown and Professor John Wilson from the Centre for Responsible Banking and Finance, University of St Andrews, in conjunction with Dr Jose Linares Zegarra from the University of Essex.



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