Brexit – Let’s wait and see, shall we?
I had a very interesting start to the day on Tuesday attending a panel session hosted by Graham Chaplin of the Bank of England Agency for the West Midlands.
The session was in the format of a “round table discussion” which focused on supply of labour and staff cost implications, investment expenditure, export issues and attitudes to increased stock holding against the looming date for Brexit. The business owners and business advisors present shared thoughts as to the impact on SME businesses in the Coventry and Warwickshire area and the current attitude of business owners to Brexit preparations.
A diverse range of topics were discussed ranging from those involved in the life sciences industry who are accumulating buffer stock until the Brexit implications are known, to input from the commercial property sector who reported a shift amongst tenants seeking property to shorter lease terms of three years until the future becomes clearer.
The haulage and freight sector are concerned about the extra burden of Customs Tariffs and the increased paperwork and whether the increased staff costs required can be passed on when margins are already tight.
Investment in staff, plant and infrastructure seem to be on hold at the moment. It seems businesses aren’t necessarily saying “no” to new investment; they are just saying “not yet”
The consensus is that most business owners accept and expect that Brexit will have an impact on their businesses but simply do not know and can’t predict what the impact might be. For some, the impact might be positive and lead to more opportunities for growth and expansion. For others, the impact might be negative and lead to a contraction of the business to adapt to the new trading environment. The potential range of impacts is huge and each individual business in the region will have to ask specifically “what Brexit means for me?”
For me, there are a number of things to take away from the discussion :
There is a change coming which will impact on most businesses – we just do not know at the moment what it will be and what changes will need to be made to each business.
Chances are, any change will need funding. Whether it is working capital or capital expenditure to facilitate growth, or whether it is funding to downsize a business or meet an increase in overheads. However, few businesses will have the cash reserves to fund the change and will therefore have to look to banks and other funders to help this process. Continued or fresh financial support for businesses post Brexit is likely to be of fundamental importance.
Not every business is going to survive the impact of Brexit. Those businesses that cannot adapt, cannot fund the changes needed or simply can’t compete due to a shift in regulation and market conditions will need specialist business recovery advice from firms such as ours. There may well be a small number of business owners that will use the excuse of Brexit for the reasons their businesses cannot continue as a mask for other unconnected issues.
However, right here, right now, the only thing we know is that “something” is going to change. But as Brexit negotiations rumble on towards March 2019, business owners simply do not know the impact and full extent of the “something”. This in turn is now creating an atmosphere of uncertainty and hesitation. It looks like we will just have to wait and see, shall we?