Small Business Survey Scotland: 2017

7. Effect of UK exit from the EU

Whether UK exit from the EU is beneficial or detrimental to the business

Almost half (48 per cent) of SMEs in Scotland believed that exiting the EU would make no difference (i.e. it would be neither beneficial nor detrimental) to their business, broadly in line with the proportion in the previous year. Almost a third (32 per cent) of SMEs in Scotland believed that exiting the EU would be detrimental for their business (20 per cent fairly detrimental, 12 per cent very detrimental), broadly in line with the prior year. Five per cent believed it would be beneficial (two per cent very beneficial, three per cent fairly beneficial), a lower proportion compared to the prior year (10 per cent). 15 per cent of SMEs did not know.

In the UK as a whole, a lower proportion than in Scotland believed exiting the EU would be detrimental for their business (27 per cent) while a higher proportion believed it would be beneficial (eight per cent). A higher proportion believed it would make no difference, at 54 per cent. 11 per cent did not know.

The net balance (i.e. the proportion of SMEs reporting that exiting the EU would be beneficial minus the proportion of SMEs reporting that exiting the EU would be detrimental) was -27 percentage points in Scotland and -19 percentage points in the UK as a whole.

SME international exporters (i.e. firms exporting to countries outside of the UK) were more likely than SMEs as whole in Scotland to believe exiting the EU would be detrimental to their business (46 per cent) and less likely to believe it would make no difference (33 per cent). Four per cent of SME international exporters believed exiting the EU would be beneficial to their business, broadly in line with findings for SMEs as a whole, but lower than the proportion in the prior year (12 per cent). In the UK as a whole, a higher proportion of SME exporters believed exiting the EU would be beneficial to their business (10 per cent).

42 per cent of SME importers (i.e. firms importing from countries outside of the UK) believed exiting the EU would make no difference to their business, 39 per cent believed it would be detrimental and four per cent believed that it would be beneficial. These proportions are broadly in line with findings for SMEs in Scotland as a whole. In the UK as a whole, a higher proportion of SME importers believed exiting the EU would be beneficial to their business (eight per cent).

42 per cent of SME innovators (i.e. SMEs that had engaged in good/service or process innovation) believed exiting the EU would make no difference to their business, 35 per cent believed it would be detrimental and six per cent believed it would be beneficial. These proportions are broadly in line with findings for SMEs in Scotland as a whole and with findings for SME innovators in the UK as a whole.

Whether businesses are prepared for UK exit from the EU

29 per cent of SMEs in Scotland that believed EU exit to be either beneficial or detrimental to their business said they felt prepared for it (seven per cent very prepared and 22 per cent fairly prepared), while 32 per cent felt unprepared for it (13 per cent very unprepared and 19 per cent fairly unprepared). 36 per cent of SMEs in in Scotland felt neither prepared nor unprepared for EU exit. Three per cent of SMEs did not know.

In the UK as a whole, a higher proportion than in Scotland felt prepared for EU exit (42 per cent) and a lower proportion felt unprepared (26 per cent). 29 per cent felt neither prepared nor unprepared and two per cent did not know.

Whether plans for growth-related activities have been affected by UK exit from the EU

SMEs were asked if they planned to undertake a range of growth-related activities ^[30] over the coming three years and if so, whether their plans had been affected by UK exit from the EU. Those SMEs in Scotland with plans to increase export sales or begin selling to new overseas markets were most likely to have had these plans affected by EU exit (35 per cent). 17 per cent of those SMEs in Scotland with plans to develop and launch new products/services had these plans affected by UK exit. 11 per cent of SMEs in Scotland with plans to invest in R&D and 11 per cent of those with capital investment plans stated that these plans had been affected by UK exit.