Speculations surrounding the upcoming Brexit are still circulating, and the most recent revelation is regarding the expansion that could occur if a soft Brexit was to take place.
A forecast produced by the National Institute of Economic and Social Research has suggested that the UK economy will expand both this year and next by 1.9%, but what could the implications of Brexit be for SMEs? Read on to find out more.
The expansion of the economy
According to think tank NIESR, the projections about the economy are based on the assumption that the UK retains “full access” to the EU market in 2019 in return for continued payments into the EU budget.
NIESR has also highlighted the fact that the fairly strong GDP projections for the UK are mainly as a result of a stronger global economy as opposed to any progress in Brexit talks.
An expanding and more global economy is of course going to benefit SMEs in the UK that are keen to diversify and capitalise on the opportunities that arise as a result of being a global brand, so this is definitely something for all business owners to think about.
What Brexit might mean for SMEs in the UK
There are concerns that Brexit may hit SMEs the hardest, firstly with regards to banking. A hard Brexit could mean that the cost of capital is much higher for SMEs to obtain and they will also be restricted when it comes to accessing wholesale banking services. There is also a risk of fragmentation if industries and policymakers don’t work together to find a solution that benefits both EU businesses and consumers.
SMEs will also find it harder to navigate the wholesale banking impacts of a hard Brexit. This is because SMEs are more likely to find their access to wholesale banking services restricted. There is also the issue that making adjustments, such as forming new banking relationships, can be material for them.
How we can help
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