Two-thirds of UK small businesses that trade with the EU say a no-deal Brexit will have a negative effect on their ability to do business, according to new research.
As the UK heads into the final months of Brexit negotiations, a new survey by the Federation of Small Businesses (FSB) reveals that most UK SMEs are unprepared for a no-deal Brexit.
Its findings show that only 14% of small businesses have started planning for this eventuality; a further 41% believe that a no-deal Brexit will have an impact on their business but haven't yet started planning for the possibility.
Only one in ten SMEs surveyed said that a no-deal Brexit will have a positive impact on their ability to do business. Almost half (48%) of those polled said that a no-deal Brexit will have a negative effect on their ability to do business. This rises to 66% for small firms that trade with the EU and to 61% for those that employ a staff member from the EU.
"Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no-deal Brexit and the impact that it will have on their businesses.," said Mike Cherry, FSB national chairman.
"If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.
"At this stage, it is understandable that some small businesses haven't started preparing as they aren't actually aware of what they are planning for. What we need now is the Government to work with the small business community to ensure that they are adequately prepared and supported if a no-deal Brexit becomes a more likely outcome in the coming weeks.
"The concern is that with only six months to go before exit day, we are now in a race against the clock to avoid a situation where we crash out of the EU causing significant damage to our smallest businesses. This must be avoided at all costs."
This week, the British Chambers of Commerce (BCC) downgraded its growth expectations for the UK economy, citing Brexit uncertainty. It is forecasting GDP growth for 2018 at 1.1% (down from 1.3%). It has also downgraded its GDP growth forecast for 2019 from 1.4% to 1.3%.