An article in the Evening Standard earlier this week on new research into the effects of a ‘No Deal’ Brexit has provided some figures on what this might mean for SMEs in London and the South-East. Populous World, who conducted the study, is a business intelligence firm specialising in business solutions.
The reason given for this disproportionately negative outcome for the capital has been put down to the proximity of businesses in this area to mainland Europe and the closer operational links which are in place.
The analysis suggests that 7,900 companies based in London would fail. This, it is stated, would in turn result in the loss of 41,800 jobs. Most concerning is that this is a number based upon a deal being made with the EU. In comparison, if there is no deal come March 2020 then the total rises to 12,540 and 66,245 jobs lost.
Steve Nico Williams, CEO of Populous.World is quoted as saying, “London and the South-East will bear the brunt of the harsh effects of a no-deal Brexit. Even with a deal in place the upheaval, friction and uncertainty of Brexit next year will send thousands of London’s smaller companies into insolvency.”
The research has also found that the number of new businesses starting in London has slowed down significantly since the 2016 Brexit referendum. They predict that, at the current rate, a no-deal Brexit could see SME closures outnumber startups, something which hasn’t happened for almost a decade.
This is just the latest in concerning statements by business institutions. The Federation of Small Businesses found that only eight per cent of London firms have started planning for a no-deal Brexit. Meanwhile, according to the Chartered Institute of Procurement and Supply (CIPS), there’s a risk of one in 10 British firms going bankrupt due to customs delays alone.
We remain unsure about how near or far we are from a Brexit deal and indeed if that deal will offer anything genuinely positive to the majority of the UK’s SMEs. Here at LawBite, we have been providing professional insight to help prepare our network as much as possible since the release of the first round of ‘No Deal’ advisory papers by the UK Government.
Our in-depth Brexit series, which has looked at the Brexit negotiations against a backdrop of various developments along the timeline, considered how a ‘No Deal’ scenario really equates to a no game plan as far as most businesses are concerned.
It appears clear that the UK Government is still genuinely aiming for a comprehensive free trade agreement with the EU. Contingency legal planning, so that businesses are best prepared and Brexit-proof, is definitely the most pragmatic way to go for most SMEs.
Our expert lawyers top 7 Brexit Proofing tips
1. Review contracts – review your existing key contracts, ensure flexibility and include express provisions for potential changes to the likes of costs caused by no deal
2. Contract-terms – expressly state whether one party or the other can terminate the contract based on the Brexit outcome
3. Map your supply chain – document and classify it and set up preliminary contingency planning
4. Contact the specific government agencies for your industry (e.g. Department for For Environment, Food, Rural Affairs and Agriculture) to get up to date relevant advice for your business. You should also speak to the equivalent in the other countries you operate in
5. Customs systems – ensure your employees are familiar with the terminology required for more complicated customs systems. For smaller companies, you may want to consider outsourcing to a specialist third-party to ensure your compliance with any new regulations.
6. Get your trademarks protected before the end of any transition period to ensure cover in both the UK and the EU. The application to registration process normally takes 4 to 6 months to complete.
7. Keep an eye on our blog for the all the Brexit latest and what it means for SMEs.
Make sure you’re prepared
We would advise that businesses take these points into consideration when considering their plans and budgets for dealing with Brexit, as well as keep a watching brief on how matters develop between the UK and the EU.
The author of this article is LawBite’s Michael Jaiyeola. This content is not a substitute for professional legal advice. For further legal advice on preparing for Brexit or any other legal matter please do enter an enquiry for a free 15-minute legal consultation. Alternatively our friendly Client Care Team today are ready to help you with your business legal advice issue on 020 7148 1066.
Brexit Impact series Part 1 | Timeline, What Next?
Brexit Impact series Part 2 | SME advice
Brexit Impact series Part 3 | Prepare for No Deal
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