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Brexit: Business Implications of Both Eventualities

Today, the EU referendum votes will be cast and tomorrow we will have our answer.

Whether or not leaving the EU is a good idea has been debated for years, not only for the past few months, and while many people have already decided how to vote, others are still undecided.

The implications of staying in the EU and leaving the EU are markedly different and it is important to have an impartial understanding of both points of view before making a final decision.

Unravelling Brexit Statistics

Ascertaining the ‘right’ answers is tricky in an environment where the same statistics are being manipulated to suit different perspectives. The following quotes have been taken from the Vote Leave and InFacts websites and discuss the same issue.

Vote Leave states: “The EU now costs the UK over £350m every week – nearly £20bn a year”

InFacts states: “After accounting for the money Brussels sent back to Britain … the net cost was £120m a week”

Here, the same thing – the cost of membership to the EU – is being discussed but the same figures from the same common source (the Treasury) have been used to deliver these distinctly different claims. Clearly, both sides cannot be right so it is important to look in depth at all claims before taking them as read and utilise other resources, such as The UK in a Changing Europe (an independent initiative committed to the task of remaining impartial and just providing the facts on UK-EU relations).

Brexit and Small Business

Both sides of the debate have argued that they have the most support from small businesses. A study conducted by the Federation of Small Businesses at the end of 2015 found that whilst 47% were on the remain side, 40.9% were going to vote leave and 10.7% were undecided. These figures show how unsure voters are.

The Better Off Out campaign group cite a European Commission report to suggest that small businesses could be free from €41Bn of EU red tape, as opposed to the Remain camp stating most SMEs (68%) have reported that they expect the UK to remain in the EU, despite 37% favouring Brexit.

Brexit and the Construction Industry

2015 figures show that people born in the EU working in construction in the UK, as a share of the overall workforce, equalled 7%, and it is recognised by many in the industry that access to foreign labour is an extremely valuable asset.

Brexit #2

Discussing Brexit at an event held by the Federation of Master Builders, MPs Mike Gapes and John Redwood argued on similar points.

Gapes argued on behalf of Remain and highlighted that the supply of EU migrants in Britain was vital to the workforce, and he further asserted that restricting people working in our economy could damage GDP and the country’s economic position.

For Brexit, Redwood argued the case for less migration, and suggested it may be ‘kinder’ to British people to leave the EU, allowing us to support our own industries and British-born workers.

Many UK construction companies work overseas in the EU as well as within this country and this is another factor to consider.

A recent poll by the Federation of Master Builders has also found that most people working in the trade will base their vote on their employment and workplace situation. 80% of builders will vote based on broad personal beliefs, while also highlighting that those who want to remain in the EU are convinced by the idea of the economic stability it brings.

Most importantly though, the poll found that over 50% of all small construction business owners are not comfortable with the level of information provided when it comes to issues around the referendum, which may impact on their businesses.

Financial Considerations of Brexit

Finance is a key issue for small businesses and firms in the UK. There have been suggestions that while the ‘red tape’ costs are removed, there is the chance that UK businesses will no longer be able to access existing SME funds in the EU, specifically setup to provide new businesses and small enterprises with additional financial support.

The European Investment Bank operates the range of funds and programmes within the EU but, to date, it hasn’t had a significant impact on SME lending in the UK. It isn’t a cut and dry situation, with this being a hugely negative change.

Another financial consideration that cannot be ignored is the credit situation that may arise should Britain leave Europe. Many financial experts, including the Governor of the Bank of England, have warned of a rise in interest rates should the UK leave Europe and this in turn would make borrowing more expensive for business, which can be the difference between good cash flow and financial difficulty.

Leave or Remain?

Whether the UK leaves or remains in the European Union is something we will all decide. There are so many different factors to consider and it is, in the end, a personal choice based upon both your business and your personal life. Only tomorrow will tell. How are you voting and why?

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