How will the EU referendum affect your business? » SMEInsider

How will the EU referendum affect your business?

With an EU referendum set to take place in 2017, we look at the pros and cons of a European exit, and how they could affect, or even improve the state of small businesses.

Pros:

Less red tape

A report produced by Creative Auto-Enrolment and the Centre for Economic and Business Research (CEBR) shows that red tape is costing small businesses nearly £5bn every single year. If the UK leaves the European Union, there would have to be a renegotiation on trading, which could result in a reduction in red tape.

Government money could go elsewhere

In 2012, Britain paid €11.3bn in membership fees to the European Union, which is more than what the treasury spends every year on railway costs and unemployment benefits. The UK would no longer have to pay for membership of the European Union, meaning that more cash could be invested into other areas that need attention, such as funding for SMEs

Cons:

We will lose our biggest trading partner

At present the EU is the UK’s main trading partner, with European trading worth more than £400bn a year, equal to 52 per cent of the country’s trade in goods and services. Small businesses in the UK are also starting to export goods more. If people decide to vote ‘NO’ in 2017, then small businesses could face serious financial turmoil.

According to a report published by EY, the EU referendum could prove disastrous for small businesses who receive funding from overseas investors. Over 400 investors were surveyed and 31 per cent of respondents said they will either reduce investment or put it on hold until the referendum situation is clearer.

Who would the UK employ?

Small businesses throughout the country could suffer employment problems if the UK were to pull out of the EU. Free movement of people throughout Europe allows SME owners to hire people for a range of jobs, proving vital for the sustainability of small businesses.

If the UK were to leave Europe, the nation would have serious problems attracting promising intellectual talent that could help improve the state of British business.

Professor Adrian Favell from the London School of Economics believes that ‘‘students may have to plan for months just to get access to British territory; no employer will be able to take their pick from the pool of European wide talent on offer; the most talented will no longer be able to see if they can make it in London, and will go (or stay) elsewhere.’’