Impact Of Brexit In SMEs In The UK Assignment

Analyzing the Impact of Brexit on SMEs in the UK: Challenges, Benefits

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Introduction of Impact Of Brexit In Smes In The UK Assignment

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Assignment 1

Project Plan 002:

This project will look after the examination of policy implications and potential impacts in the UK based on medium and small-scale firms regarding a decision of leaving the European Union. These SMEs are analysed as the main part of this economy. There will be an analysis of impacts that are based on uncertainties in leading with limitations of resources and reduction in resistance to unexpected stocks. The views of SMEs will be placed that will analyse their difficulties in taking any contingency plans in order to deal with unforeseen events such as Brexit.

Background and rationale of study

There is a huge impact of Brexit among SMEs that are facing issues with both international and domestic trading. They are in view to leaving the European Union (Lesort et al., 2019). They viewed that there is low availability of resources and it is getting difficult for them to take decisions on contingency plans.

The issues that could be analysed while getting reviews on this may be a lack of data and many individuals would not give a detailed review of their problems (Fuller and C., 2019). This will require a huge area of research study that will require authentic journals and articles to get details on this.

Aim and Objectives of research

The aim of this study will be to analyse the impacts of Brexit on SMEs in the UK.

The objectives that will be highlighted in this research study will be analysed

  • Impacts of Brexit on SMEs in the UK.
  • Investigate challenges faced by SMEs in the UK
  • Analyse benefits of Brexit in UK business

Problem statement

The problem that could be analysed with this research is that there is a tremendous impact on businesses that are facing lots of issues with the availability of resources, weak financial stability and reduction in staff in that particular areas.

Literature Review

These SMEs are analysed as backbone of the economy as this helps in development of a country in economic terms. There are various laws passed on value-added goods that are imported into regions from European Union to UK (Vega et al., 2018). Thus, there are issues created for many small business firms that need to seek new suppliers in the UK and EU in evaluating various easy to reductions of cost in trade. This law has made changes in various multinational retailers and importers in UK due to adding up value-added tax in supply chain.

Time Plan

Figure 1: Time Plan

(Source: Self-developed)


Thus, it can be concluded that this project plan will generate a lot of understanding of the impacts of these Brexits among SMEs and will also provide details on other issues that are faced by the small and medium business firms in that particular country. Thus, there will be a huge data and facts generated on this topic that will be useful in further analysis.

Assignment 2:

Background of the report/ introduction

The study evaluated about potential impact of Brexit on SMEs in the UK. It is evaluated in June 2016 vote exhibits Brexit and an unprecedented event that led to societal consequences and seismic economic outcomes. Brexit has potential in evaluating rules that lead to governing of UK SMEs conducting business both internationally and domestically. SMEs are evaluated as the core part of the economy of the UK and account for 99% of all organisations and 60% of total employment in the private sector (Brown, Liñares-Zegarra & Wilson, 2019). SMEs are a disproportionate impact based on the uncertainty that leads to limitation of resources and lowering resistance to unexpected shocks. this uncertainty leads to crate major role in shaping process of decision-making of an organisation. It is also evaluated that Brexit leads to create a potential increase in uncertainties associated with the trading condition of SMEs. Due to constraints of human resources and finance, SMEs are facing difficulties in undertaking contingency plan that is required to adequately deal with unforeseen events like Brexit. It also evaluated SME's impact of Brexit depending on final terms of resultant deal between the UK and rest of the EU and other geographic locations, business orientations and industry sectors. It is also evaluated that Brexit leads crate consequence of skills shortage and in a report by Edge foundation in 2018, more than 40% of employees leads to struggle to recruit the highly skilled labour that is required for business (Tiwasing, 2021). Brexit leads to creating pressure on existing skills gaps in the UK government's intention that leads to the end free movement of labour. It also evaluated the most controversial issues associated with future growth, trading and immigration.

Project Objectives, Research Questions and Problem Statement

Project Objectives

To analyse impact of Brexit on SMEs in the UK

To investigate challenges faced by SMEs in the UK

To analyse benefits of Brexit in UK business

Research Questions

How does Brexit affect small businesses in the UK?

What are the challenges faced by SMEs in the UK?

What are benefits of Brexit in UK business?

Problem Statement

The impact of Brexit has a tremendous impact on small businesses leading to create various problems like lack of resources, weakening oif financial stability in relocating and claiming financial assistance and also a lack of staffing power.

Literature Review

Impact of Brexit on SMEs

SMEs are the backbone of the economy of the UK. This sector provides jobs and significantly contributes to innovation and growth in generation of economic volatility. In 2017, it is evaluated that SMEs represented 99% of 5.7 million businesses in the UK which leads to providing 70% of employment in the private sector and also accounted for 73% of job creation (Brown, Liñares-Zegarra & Wilson, 2019). Due to Brexit, the UK parliament passed a law that imposes a value-added tax on goods imported from the region of EU into the UK. This factor leads to create problems for about 100,000 small businesses and the need to seek new suppliers within UK or out of EU to evaluate new ways of reducing cost of trade. The law also created significant changes to multinational retailers and major importers of the UK due to adding value on tax by supply chain during importation from EU. The increase in tax evaluation is an unfavourable condition for small businesses for SMEs that evaluate support for majority of population. It is evaluated that before leaving UK, EU provided funding through EIF (European Investment Fund) and helped in sparking innovation within SMEs. The finance of EIF leads to providing through banks and issuing money through loans. Brexit leads to create a negative consequence of this funding and leads to create an impact on the economy of the UK due to several SMEs will not receive funding. Also, lack of funding leads to create a deficit in tax revenue of the UK. Brexit leads to creating a negative impact on major opportunities for SMEs in the international market. Due to fluctuation of exchange rates, the affordability of international services and goods had a negative consequence (Tiwasing, 2021). Due to improved exchange rates, SMEs in UK leads to export services and goods at competitive prices. Brexit has also created and opened trade opportunities with China, Japan and US. These factors lead to creating opportunities for SMEs in expanding business and reaching new customers. Brexit leads to create major disruptions in services and goods between EU and UK. Due to new trends, it is evaluated that SMEs are facing various challenges in fulfilling customer orders which continue to affect SMEs within the EU and UK. Brexit could lead to a decrease of GDP by 6.7% and evaluating economic shock that negatively affects customers by reducing purchasing power and also poor purchasing leads to creating low sales revenue for local SMEs.

Challenges faced by SMEs

Full implementation of Brexit leads to creating freedom of movement between EU and UK and European Economic Area citizens leading to continuing and providing applications for pre-settled and settled status. The restrictions of movement are creating a negative effect on SMEs in the UK due to most employees being dependent on skilled EU migrants due to low labour costs and competitive skills. In post era of Brexit leads both non-EU and EU migrants in subject to new immigration laws that lead to scrutinising migrants based on a points system for eligibility for a visa (Gao, 2022). An employer form is required for an immigrant visa to work in the UK. Other factors like education lead to determining eligibility factors for a visa to the UK. The restriction oif movement after the post-Brexit temporary shortage in immigration system is evaluated in the workforce of the UK. It is due to the factor of reduction of more than 70% EU migration and reduction in migration leads to an evaluation of ageing and shrinkage of workforce (Gao, 2022). It is also evaluated by the Federation of Small Businesses 2017 released a report that exhibits most skills shortage vacancies that are reported by SMEs of approx 37% of skilled trades, 15 % for information and communication and 23% for professionals. It is also evaluated by Edge foundation in 2019 that more than 100,00 jobs are reported as a shortage of vacancies in the industry of hospitality and it is characterised by hard-to-fill vacancies (Gao, 2022). it is also evaluated that EU migrants can lead to overcoming labour shortages associated with highly skilled businesses and growth. The immigration is induced by Brexit leads to crate consequences based on appropriate labour inputs that can affect economy of the UK. The uncertainties of Brexit lead to slow down UK's growth from 2.4% to 1.6% in 2019. It is evaluated that Brexit leads to lowering growth of the UK by 6.7% over 15 years. It is also evaluated that fall of British pound from $1.48 to $1.36 create in increase price of import. It is also creating negative effects on trade agreements that enable;e zero quotas and zero tariffs on goods trade that comply with appropriate rules. Brexit leads to create a negative effect on jobs and hit medium-skilled and low-skilled occupations badly. The Brexit leads to creating uncertainties for stability of economy of loss of the UK (Tiwasing, 2021). Disruption of flow of goods and services from the UK is evaluated as a long-term effect of Brexit. It is also evaluated that many small business leads respond based on stockpiling goods and tariff-free trade between EU and UK and creating transparency in trade practices of small businesses. Brexit leads to create a negative impact as it leads to economic shock and causes a loss of GDP growth.

Benefits of Brexit

It is evaluated that benefits of Brexit lead to evaluation reduction of vulnerabilities in international shock. It has led to reduced various vulnerabilities to international shocks that are caused by invasion of Ukraine and pandemic. it is also evaluated that it leads to creating more resilient supply chain disruption due to changes evaluated because of Brexit. It has led SMEs in showing 58% of business moved to local suppliers in the UK and leading to a big boost in the UK business (, 2022b). it has been evaluated that fewer EU restrictions create a positive outcome for Brexit and created the ability to trade freely with non-EU markets like Australia, US, Japan and many more. It also leads to increased opportunities for growth in emerging markets like South Africa, China and Brazil which accounted for more spending customers every year. These factors also evaluated about fall of the British pound leads to making it cheaper for international markets and evaluating more benefits for exporters. It is also evaluated that Brexit leads to simplifying burdens of SMEs. It is evaluated that these factors lead to creating opportunities for SMEs in expanding business and reaching new customers in new emerging countries.


This methodology is adopted to have a detailed analysis of impacts of Brexit on SMEs in the UK. This is a way through which there is a detailed investigation based on this topic, highlighted. In this research, the secondary data analysis method is used which deals with a collection of data and facts using past information and records (Butler and O, 2019). The research philosophy used here is Realism that deals with exploration of new facts and figures through independent objectives and hypotheses. The Research Approach used here is inductive that are through investigating new information and hypothesis inspite of considering any pre-defined examples (Bailey et al., 2022). A descriptive research design is used as this provides evidence and proofs on existing facts and figures.

The research strategy is used in implementation efforts and thoughts in systematic ways. There is use of various journals and articles to get a detailed view of the impacts of Brexit among SMEs. The Secondary data type is one useful methodology that provides great data and facts on the topic (Blackaby and D., 2018). There are also various journals and articles by different authors available. This secondary data is collected from both quantitative and qualitative ways. This qualitative data are collected through diaries, newspapers, transcription and interviews. The main advantage received of using this data collection method is that all information was easily available with all data and figures.

At time of data collection, it was kept in view that there is no harm to any ethics of any individual or society. The data collected were shared with all members of the research study and no outsiders were shared with such information ( , 2022). The data were collected and no acts of the volition of copyright were done. There was maintenance of authenticity at the time of choosing data and literature and all such data have been preserved with privacy.

Findings/ Identified problems from the research

Effect of Brexit on SMEs in the UK

Brexit has a significant influence on supply chain of business and has an adverse influence on international, trade and logistics operations that increases in price of raw materials and goods. In addition, disruption in supply chain significantly influenced businesses of SMEs and resulted in financial instability of SMEs. According to Douch & Edwards (2021), Brexit makes exports of goods difficult for SMEs in the UK, especially for SMEs and SMEs compelled to ask for financial assistance from the government. Additional charges were also implemented on imports from EU after Brexit that adversely influenced FDI and investors to invest in the UK and as a result, SMEs were severely affected. These factors severely affected financial performance of SMEs and raise questions about the sustainability of SMEs. According to the opinion of Bouoiyour & Selmi (2018), Brexit is likely to affect businesses of around 130,000 SMEs and SMEs are planning to relocate to other parts of world. In addition, disruption in the supply chain causes a reduction in supply of raw materials and significantly increases the costs of raw materials that lead to an increase in price of commodities (, 2022). These factors hugely affected overall financial performances of SMEs in the UK, especially businesses that are hugely dependent on imports or exports of goods or services form EU countries.

Challenges faced by SMEs in the UK

Disruption of supply chain and increase in customs or border tariff charges adversely influenced businesses of the UK, especially SMEs who have limited opportunity to relocate their supply chain. According to Gao (2022), due to adverse effects of Brexit SMEs are facing issues or challenges like capital shortage, raw material shortage, increase tax rates, governmental regulations, product liability patents and severe business concerns like franchise abuses. Increased costs and delays in supply of raw materials due to disruption of supply chain caused by Brexit demotivate investors to invest in SMEs and an increase in logistics costs lead to commodity price increases that adversely affected sales. According to Filippaios (2019), the impact of Brexit on internationalisation of SMEs was quite severe as Brexit imposes several guidelines and regulations on businesses that adversely influenced businesses of SMEs in international market. In addition, in post Brexit transition period governmental regulations increase complexity of SMEs and it is because pre-Brexit period businesses followed EU business standards that will increase complexity to ensure compliance with UK standards. Customs prices increased significantly and employment law compliance with UK standards leads businesses to face operational complexity (, 2022). Intellectual property laws adversely affected businesses of SMEs and Brexit also led them to face severe economic issues or financial consequences.

Benefits of Brexit on UK business

Despite harming businesses in the UK, Brexit was also beneficial for businesses, especially for SMEs and it significantly boosted local SMEs. According to the opinion of Feldmann & Morgan (2021), Brexit significantly reduces vulnerability of risks associated with international shocks, supported growth of domestic suppliers, eliminates EU restrictions, increases opportunity for growth for SMEs and eliminates complex reporting burdens of SMEs. Expert professionals believe that exit from EU significantly reduces the severity and probability of international shock, especially from adverse effects of covid-19 pandemic and Russia's Ukraine invasion. According to Sastry (2020), supply chain changes caused by Brexit will significantly benefit businesses of the UK and it may significantly increase export rates to other countries except for EU countries. In addition, due to Brexit, the UK have to face fewer EU regulations that will significantly enhance trade with non-EU countries and government is aiming to reduce reporting burden of SMEs.

Recommendations and Conclusion


Based on study analysis it can be concluded that Brexit has both positive and negative impacts on businesses of the UK and businesses of SMEs. Adverse effects of Brexit on businesses especially include adverse consequences of supply chain disruption, compliance with legal standards of the UK during a transition period and a significant increase in tariff rates. In contrast to that, benefits of Brexit on SMEs in the UK include a reduction in EU regulations, growth opportunities for local suppliers and SMEs, a reduction in severity of international shocks and a reduction in reporting burdens for SMEs. These factors helped in concluding that effect of Brexit is still suspicious for UK exporters and may adversely influence FDI for SMEs.



Sastry, V. V. L. N. (2020). BREXIT-and Its Impact on India’s Export Business. Idea Publishing. HQ: Amsterdam's Houthavens


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