FSB’s latest report, ‘Keep Trade Easy: what small firms want from Brexit’ shows the top priority market for small firms is still the EU single market (63 per cent). It also reveals the importance of other markets, with nearly half (49 per cent) of FSB members selecting the US as a priority market and one in three (29 per cent) choosing Australia.
Other key markets include China (28 per cent) and Canada (23 per cent). The research reveals the potential impact of tariffs being introduced to UK-EU trade. One in four (27 per cent) exporting small firms would be genuinely deterred from trading with the EU should any tariff – no matter how low – be introduced. Should the UK find itself trading with the EU under World Trade Organisation (WTO) rules alone, exporters would face the EU’s most-favoured-nation tariffs.
One in three small business exporters say they would be deterred from trading with the EU if a tariff rate between two and four per cent (the range within which the EU’s average applied tariff tends to have fallen over the past few years) was introduced. Crucially, small business exporters and importers also find non-tariff barriers (such as administrative burdens in dealing with customs) to be as equally important as tariffs.
The new research also discovered that over half (58 per cent) of smaller firms find the EU single market easier to trade with than non-EU markets (6 per cent find it harder to trade with the EU single market). Nearly half (45 per cent) of current exporters and over half (53 per cent) of current importers find trading with the EU single market cheaper than trading with non-EU markets.
While only nine and eight per cent, respectively, find it more expensive. Mike Cherry, FSB National Chairman, said: “This new FSB research reveals the true small business wish list for future trade deals. Small firms trade with countries based on ease, cost and value and any future trade deal must deliver on these key aspects both with the EU single market and non-EU markets. “The top non-EU countries of choice for trade deals include the US and China.
However, the reality is that the EU single market is still a crucial market for smaller firms and cannot be undervalued. Compared to larger companies, small businesses typically work to tighter margins with limited resources, meaning changes to the trading landscape will hit them disproportionately hard. We call on the Government to ensure that a sensible phased implementation arrangement is put in place to avoid a cliff edge, once we have left the EU.