CYBG chief executive David Duffy is right to flag the importance of small and medium-sized enterprises to the UK economy, particularly at this juncture as protracted Brexit negotiations get started.
Launching the bank’s SME “health check index”, he says such businesses’ future prospects “are likely to be ever more critical post-Brexit, when we will be dependent on a stronger and more competitive domestic economy”.
However, it is crucial to emphasise the outcome of the Brexit negotiations will be absolutely crucial to the prospects of these SMEs.
Many may be domestically focused but a huge proportion will rely on workers from other European Union countries. Future growth of these firms may well be dependent on this flow of workers from other EU nations continuing.
And many SMEs will export, so it will be crucial to their future success that trade with key markets in the EU remains tariff-free, and unencumbered by bureaucracy.
Graeme Sands, head of business banking at CYBG, rightly points out SMEs cannot afford to sit on their hands during the Brexit negotiations.
However, SMEs are already having to deal with the effects of the Brexit vote. Sterling’s fall has pushed up import prices and thus hiked businesses’ costs. It has fuelled consumer prices index inflation and squeezed household spending power, on which firms depend.
If the UK Government is serious about the health of the SME sector, it will ensure it does not create even more challenges for these firms. It must in negotiations recognise, and act upon, the need to mitigate the damage from Brexit to the economy.
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