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UK SMEs optimistic on post-Brexit economy

Small UK businesses are feeling optimistic about the country’s economy according to latest findings which indicate an upbeat feeling following progress with Brexit.

More than 2,000 SMEs were surveyed by Clearwater International with 80% feeling optimistic about the economy, instead citing concerns around recruitment and finding new markets, ahead of servicing debt or accessing finance.

With the UK set to embark on a new era of global trade negotiations for the first time, the importance of minimising friction in trade and having zero tariffs and quotas is also more critical than ever to small businesses across the UK.

A separate report from the Federation of Small Businesses and the UK Trade Policy Observatory at the University of Sussex has highlighted what small businesses need to capitalise on from Free Trade Agreements (FTAs) following Brexit.

The US (46%), Germany (38%) and France (36%) identified as top individual country markets for small exporters and importers over next three years.

The EU Single Market and Customs Union is the most important trading bloc for current small exporters (62%) and importers (55%), compared to the USMCA (48% and 33%) and CPTPP (45% and 25%).

All future Free Trade Agreements must include a SME chapter and a dedicated SME committee to be set up including private sector representation and must look to reduce non-tariff barriers. This committee should have a meaningful say in the key areas that will affect small firms whether that is e-commerce or trade facilitation.

The research involved a review of recent major trade agreements and identifies best practice for provisions in Free Trade Agreements that will help SMEs achieve their trade ambitions. These range from supporting e-commerce, protecting intellectual property rights through robust enforcement, and supporting trade facilitation – particularly regarding customs procedures.

Small businesses’ share of global trade is behind our domestic economies. A key issue will be tackling the low use of preferences in FTAs by SMEs. For example, the compliance costs of stringent rules of origin can mean small businesses choose not to take advantage of preferential terms of trade within an FTA.

Finally, ensuring the enforcement of intellectual property protection is also of key importance to all small businesses.

Federation of Small Businesses (FSB) National Chair, Mike Cherry, said: “Small businesses are already the backbone of the UK’s domestic economy. For our country’s future prosperity, we now need to see their share of global start to catch up, by putting SMEs front and centre of all new trade agreements, especially as we depart the EU.

“It is essential that the needs of smaller firms are at the heart of future FTAs through a dedicated small business chapter in each agreement, and that the Government has the necessary architecture in place, to ensure the small business voice is heard loud and clear.”