What would an EU exit mean for small businesses?
With the general election now a distant memory, political talk has turned to the UK's membership of the European Union (EU), with an in-out referendum scheduled for 2017.
The big question on everyone's lips is 'should we stay or should we go?' The country is seemingly split down the middle, but in two years' time we should find out for sure. This is when Prime Minister and Conservative Party leader David Cameron intends to hold his big referendum.
Cameron himself wants to stay, and says the vote simply provides a chance to highlight the benefits continued membership would provide. Small business owners, however, have expressed a little more caution.
Let's take a closer look at what a so-called 'Brexit' would mean for the (estimated) five million small companies currently operating in the UK.
The majority of independent firms don't actually trade with customers in other member countries, but all have to abide by the union's regulations; regulations that are often described as being 'over-the-top' and 'counterproductive'. Complex tax procedures, for example, take up valuable time and money, hampering growth in the long term.
The rules also ensure fewer inventions are patented, meaning industries are held back from making sales and attracting new customers. Additionally, there are knock-on effects upon employment figures to consider.
Should the UK leave the EU, it's expected that much of this red tape will be instantly removed - clearing the way for imaginative small businesses to excel. The result could be a much healthier UK economy.
Changes in international trade
Those in the pro-EU camp argue that membership gives smaller companies better opportunities to trade across the continent, and in many ways, they're right. The fact that most member states now use a single currency (the euro) removes plenty of barriers. While the UK still uses the pound, companies here can trade to various countries without constantly switching between currencies.
While red tape does cost both time and money, the EU does, in theory, reduce much of the paperwork faced by businesses trading internationally; it provides a bit of standardisation, especially when it comes to customs procedures. If we leave, this could be lost and companies may have to deal with more admin.
Tell this to a Brexit supporter, however, and they'll likely highlight the examples of Norway and Switzerland. GDP-wise, these are two of the three richest countries in Europe, and both rely heavily on trade with EU member states without being part of it themselves.
The potential for more investment
EU membership isn't free. In fact it costs the government a fair bit. According to fullfact.org
, the UK's gross contributions reached £14 billion in 2013. Now, it's important to note here that we also benefit financially, through rebates and other arrangements. After these, the net contribution was £8.6 billion, which still works out at more than £23 million per day.
This is money that could be invested back into the UK's small business world, helping new entrepreneurs get their ideas going, and providing existing firms with the support they need to compete with larger companies.
Of course, it's not quite as simple as the potential savings being split between every single SME, but there'd certainly be a little more assistance on offer.
For a small business to grow into a big one, it must have the right people at its heart. The UK relies heavily on foreign workers, the vast majority of whom come from other EU countries. This is because businesses aren't required to obtain work permits as they would for someone from South America or Asia, for example.
If we leave the EU, visas would be required for all non-British citizens, reducing the talent pool drastically and making it harder for small businesses to build strong, productive workforces - its own kind of red tape.
Problems closer to home
As far as opinion polls go, EU sentiment is much more positive in Scotland than it is in the rest of the UK. Should the UK as a whole vote in favour of an exit, it will give Scotland a stronger argument for independence - and this could impact businesses across the rest of the country.
The Centre for Economics and Business Research, for example, says companies in England would likely see an influx of competition nationally as firms move south. Should this happen, job openings will also increase - great news for unemployment figures but not so good for small businesses trying to attract the best talent.
Watch this space...
It's clear that the EU - and any potential exit from it - is a bit of a double-edged sword. Leaving would bring about various changes to the way in which small businesses operate; some positive, some negative.
What's important is that everyone in the UK will have a chance to vote on what we do as a country in 2017. It's essential that, before this time comes, business owners go through the details and determine just how the outcomes will impact them.
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