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Economic news – Embassy 62

UK small firms divided over BREXIT

UK small businesses are narrowly in favour of Britain remaining inside the EU, but one third say they lack the knowledge to make an informed decision, according to a survey compiled on behalf of the Federation of Small Businesses (FSB).

At an AERL meeting hosted by the FSB, envoys learned that 47% of small business owners would vote to stay inside the EU against 40.9% who would opt to leave, while 10.7% remain undecided.

Addressing the AERL, David Caro, Chairman of the EU and International Affairs Committee of the FSB, said the survey – which included the views of 6263 members – was the largest the organisation had conducted on this critical issue facing small firms.

Caro stressed that the FSB was “politically neutral” and would not take a position on the referendum nor advise members how to  vote. However he said that in the run-up to the referendum the FSB would ensure that “the voice of small businesses was heard in the discussions”.

The survey showed that voting intentions of business owners differed markedly when broken down by nation, with Scottish small firms most in favour of staying in the EU (59.9%), while English small enterprises were least in favour (45.1%).

Those members who rely on the EU for trade in some form (exporting, importing, employing non-UK EU employees) were more likely to agree that there is a benefit in the UK’s membership of the EU, not only to the UK economy as a whole, but to their local area, their business and to themselves as individuals.

Free movement of labour was a significant factor driving opinion, both for and against EU membership. Trade, notably access to markets, was also considered important. EU regulations were seen as both positive (for “levelling the playing field”) and negative (because “red tape” harms competitiveness).

Other non-economic factors likely to influence voting intentions included EU culture and values, ease of travel in Europe and the impact of an exit on the UK’s peace and security.

Importantly, the survey revealed that a third of respondents felt they had inadequate understanding of the issues and the workings of the EU to make an informed decision.

“From all sides of the spectrum our members felt the information they were getting from media and government was not neutral and that they are looking to us to provide sensible and factual information,” said Caro.

During the discussion, economic attachés proposed that further research would be helpful, specifically into the nature of small businesses’ “second or third degree links with the EU” or Europe’s “integrated supply chains” so they had a better understanding of the real impact of an exit on their businesses.

Attachés added that small firms may want “more transparency” on the reform package being negotiated. In the survey, more than a third of those seeking to stay in the EU wanted more powers transferred back to the UK, while a quarter of respondents said they would want the UK relationship with the EU to stay the same.

Having clear, unbiased information on the UK Government’s “exit strategy” may have an important impact on voting intentions, AERL members suggested.

Of those firms in favour of leaving the EU, 42.7% wanted the UK to strengthen its trade relations with the rest of the world, while 29% said the UK should strike trade deals with the EU and individual EU countries and 22% wanted the UK to remain part of the EEA.

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Debating the ins and outs of the EU referendum: David Caro of the FSB and AERL Chairman Nicholas Niggli
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