There is a perception that the election of Donald Trump as US President and the UK’s decision to leave the EU will be bad for British small businesses. But in a recent survey, British small to medium-sized enterprises (SMEs) expressed optimism over both the “Trump effect” and Brexit. Turner Little reports.
Business Confidence
These findings came from serviced office space provider Citibase’s new Business Confidence Index. Here, two thirds of UK SMEs said that the Trump Presidency will either have a positive or no effect on UK businesses. Those who support hard Brexit were more likely to hold this view, while soft Brexit backing SMEs were more likely to believe that Trump could have a negative impact on UK firms.
These two kinds of Brexit refer to whether the UK will prioritise sovereignty (hard) or freedom of movement (soft) in EU exit negotiations. Soft Brexit was more popular among UK SMEs, with 42% in favour, while 33% backed hard Brexit. However, 54% of London-based SMEs admitted that they favour soft Brexit. Also SMEs in the North-East were the most confident about their business prospects under a Trump administration, at 26% of those surveyed.
Commenting, Citibase CEO Steve Jude said: “SMEs are the heartbeat of the UK economy and we have found that both Trump, and the impact he is having on the world, along with the confusion surround the UK’s Brexit strategy has been mostly water off a duck’s back for our country’s SMEs… When it comes to the type of relationship SMEs want with Europe, opinions are mostly in favour of a soft Brexit, which is timely with the fluctuation of sterling due to ongoing Brexit discussions.”
Positive attitudes
Expanding, he said: “2016 was a year of significant political change with the UK Brexit vote followed by a Donald Trump US election win. No one can predict the future… with all this political uncertainty, it is unlikely a business would sign up to an office for the long term. These SMEs crave agility to help manage risk and costs, allowing them to scale up and down easily in these fascinating times.
“What it has done though is increase their desire to move away from long term office contacts as why would anyone want to be tied down in these uncertain times.” In the current political climate, SMEs are opting for shorter office contracts. The number of SMEs signing a short-term agreement of under three years has increased from 57% to 59%. Also, with an increase from 25% to 29% of those polled, more SMEs are now opting for a lease which last for less than a year, when choosing office space.
But overall, Citibase’s figures indicated that SMEs understand the benefits of Brexit. When asked about the outlook for a post-Brexit UK, 33% of SMEs polled expressed a positive opinion, as opposed to 22% who backed a negative outcome. Also, 75% of the respondents admitted that their firm’s revenues have either remained the same, or actually increased, since the UK voted to leave the EU.
New opportunities
A majority of British SMEs are confident that neither Trump, nor Brexit, will impact their ability to earn profit. This may be because the UK possesses an extremely favourable business climate, with one of the lowest corporation tax rates in the developed world. If you wish to benefit from low corporation tax rates, as well as a favourable trading environment, consider setting up a limited company in the UK. Turner Little can advise you on limited company formation, helping you build a strong business.
Turner Little
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.
