As the UK departs the European Union, small businesses are urging the Government to focus on negotiating an ambitious new trade deal with the EU, and building a flexible and fair immigration system.
Research from the Federation of Small Businesses (FSB) shows that the EU remains the number one trading bloc for small business exporters (62%) and importers (55%) in terms of their future trading aspirations over the next three years. One in three (32%) small firms are already involved in overseas trade, with the vast majority trading with the EU single market (92% of exporting small firms and 85% of importing small firms). The US (46%), Germany (38%) and France (36%) are considered the most important individual markets for small traders over the next three years.
Given the importance of UK-EU trade for small firms, Government should prioritise not only securing a tariff and quota free arrangement on goods but a deal that also minimises non-tariff barriers, such as rules of origin compliance requirements or product certification and labelling rules when negotiating provisions.
Furthermore, mutual recognition of professional qualifications is essential for the many smaller businesses that rely on travelling to the EU to undertake a service. For any new Free Trade Agreement, a comprehensive small business chapter must be included.
Mike Cherry, FSB National Chairman said, “The last three years have felt like Brexit purgatory for small businesses. Getting Brexit done will be welcomed by many of these businesses and they can now look forward with more certainty and renewed confidence.
“But as one chapter of Brexit ends, another begins, with little time on the clock to flesh out the crucial details needed to secure an ambitious deal that works for all of the UK. With only eleven months left before the transition period ends, small businesses will need a clear picture of where we are heading as quickly as possible. Time cannot be wasted.
“Firstly, attention must turn to negotiating a comprehensive free trade agreement with the EU – small businesses understand there will be some additional friction in trade with the EU after the transition period but want to ensure this is kept to a minimum. They also need time to adapt to new trading arrangements and financial support to absorb some of the additional costs.
“It is vital that the Government release its negotiating objectives swiftly to give small firms an idea of what a potential deal will look like. This will help them to plan and invest ahead of the changes.”
Previous FSB research shows that over half (59%) of small businesses with EU workers are concerned about accessing the skills they need post-Brexit while the vast majority of small firms (95%) have no experience using the UK’s current immigration system that applies to non-EU nationals.
These small businesses would consider either moving their business abroad (13%), reducing operations (13%), or closing the business (8%) if there were additional barriers to recruiting EU workers.
Small businesses need a new immigration system that enables them to access the skills and labour they need from across the globe. One in five smaller business employers has at least one EU member of staff. Alongside visas requiring a job offer, small firms want to see a temporary non- sponsored route available that allows for a stay in the UK of two years for EU/EEA nationals of all skill levels, to give time to adjust to the new system including through adopting new technologies and retraining staff.
This system needs to be cost effective, easy to navigate and efficient. Additionally, the new system must not worsen skills shortages in sectors, such as care and construction, that are already struggling to recruit workers.
Cherry added, “For many small businesses, a fair and flexible immigration system is just as, if not more, important than securing our trading future. These firms rely on talent from outside the UK to plug current skill gaps, grow their businesses and contribute to the wider economy.
“From graphic design studios, to farms, to care homes, to engineering firms – tighter immigration restrictions will hurt businesses across all sectors and all skill levels. It is critical that workers, that are vital to unleashing the UK’s growth potential, are not locked out by a system that doesn’t meet the needs of the UK’s business community.
“The challenge now for the Government will be to secure the comprehensive free trade agreement with the EU and build a new, employer-responsive immigration system before December 2020.
“The only clear path to achieving this is if the Government chooses to work hand in glove with the UK business community. In partnership, we can deliver a new and lost lasting trading relationship with our closest neighbour and a fair and flexible immigration system that will meet the future needs of the UK.
“We stand ready to provide evidence and insight to support the Government achieve these aims.”