How Brexit could effect small business

As you most likely know, on 23 June 2016, a referendum will be held. The vote will decide whether the UK will remain part of the European Union. A so-called 'Brexit' could effect many aspects of British society and for young entrepreneurs, the effects on small business may be some of the greatest. So should we stay or should we go?

Small and medium-sized enterprises (SMEs) account for over 99% of British businesses and over 60% of all private sector employment in the UK. Should the referendum result in an exit, there is no doubt that small business owners and all those involved with them will feel the impact. Whether it be a positive or negative impact is what still remains to be determined. To put it very simply, leave campaigners argue that the positive effects leaving the EU will have on SMEs will outweigh any potential negatives. One of their main issues regarding membership in the EU concerns the EU-established regulations that all businesses must follow. They view separating from the EU as the solution to that issue, and believe that it would allow for:

  • SMEs to rid themselves of the “expensive and unnecessary” EU-imposed regulations and instead create regulations of their own or the UK’s own choosing
  • SMEs to conduct international trade without being limited by the regulations imposed by Brussels
  • Trade by SMEs to continue to flourish, with the difference being that it would occur under WTO regulations
  • SMEs leaders would have more freedom and the ability to employ larger numbers of employees at higher wages

The “remain” campaigners have their own arguments against leaving the EU. To once again put it simply, remain campaigners believe that the following consequences would result from Brexit:

  • Employee and firm relocation would occur, and millions of jobs would be lost.
  • EU funding in the forms of grants and loans would be lost, with no guarantee that the UK would be able to provide supplements for that funding.
  • No certainty that trade by SMEs would decrease, but also no certainty that a large trade market would open up.
  • The renegotiation process would be time-consuming and full of uncertainty - is Brexit even worth it?

For now, there is still too much uncertainty to allow for any sort of prediction about the results of the referendum. One reason for the uncertainty is because of the impending decision on Prime Minister David Cameron’s proposed reforms. His reforms would take place should the UK remain in the EU, but the result of that proposal is still waiting to be confirmed. A second reason is because of Chancellor George Osborne’s recent Budget talk. In his speech, he proposed a number of reforms with intentions to benefit small businesses. Are those proposals enough to convince the public to vote to stay in the EU? Or will it sway the public in the opposite direction? Finally, it’s important to stress that all of this is speculative. Nothing can be predicted with absolute certainty just yet, but nonetheless, the above mentioned points, and the tons left unmentioned, are all important points and questions to keep in consideration when making your decision. Make sure to cast your important vote in June! Register to vote here: gov.uk/register-to-vote

About the author:

Taylor Kwok is a third year student at Boston University studying International Relations and Business Management. She is currently studying abroad in London and was glad to join NACUE because of her interest in education, nonprofits, and small companies. Her interests include traveling, swimming, blogging, and taking pictures of food (for Instagram of course).

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