Three quarters of region's firms do not fear Brexit, says survey

AROUND three quarters of Yorkshire's entrepreneurs do not see Brexit as a threat to their business, according to a survey.

Wednesday, 30th November 2016, 3:28 pm
Updated Tuesday, 6th December 2016, 12:41 pm
Boris Johnson MP campaigns for Vote Leave on the last day before voting in the EU referendum in the market town of Selby, North Yorkshire.

However, the study by commercial insurer RSA found that more than one in three of the owners of Yorkshire’s small and medium-sized enterprises (SMEs) believe they would go bust if they were hit with an unexpected £50,000 bill.

The survey suggests that many Yorkshire businesses do not expect to suffer a downturn in their financial performance after Britain leaves the European Union, although they are concerned about short-term economic uncertainty, increased competition and cash flow problems.

RSA’s report - Future Impacts - assesses the effects of economic events such as Brexit on business growth, as well as the risks that businesses face and how they are managing them.

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The research found that Brexit is not seen as a risk by 73 per cent of businesses in Yorkshire, with 49 per cent stating that leaving the EU will have no impact at all and 24 per cent saying that it will have a positive effect on their business.

On average, around 70 per cent of UK firms said they did not regard Brexit as a risk.

Russell White, the schemes and deals director for regions and SME in commercial risk solutions at RSA, said there appeared to be a correllation between how a region voted in the referendum and the business owner’s attitude to Brexit.

In Yorkshire, there was a 58 per cent to 42 per cent vote in favour of leaving the EU, which was a bigger margin than the UK-wide result of 52 per cent to 48 per cent.

An RSA spokesman said: “SMEs identified a range of more significant threats that many companies are not sufficiently protected against. Thirty five per cent of SMEs in Yorkshire say they would go out of business if faced with an unexpected bill of £50,000, compared with a national average of 28 per cent. Yet 59 per cent of SMEs in Yorkshire are not insured against any of their top three risks, compared with a national average of 58 per cent.”

RSA’s Future Impacts report also analyses the emerging risks for UK businesses, with 73 per cent of SMEs stating that new risks have emerged since they first started their company.

However, little is being done to tackle these risks, according to RSA.

The study found that 82 per cent of the businesses surveyed have not altered or increased their insurance coverage as a result of technological change.

The spokesman added: “The threat of cyber-attacks, for example, is one of the most prominent emerging risks for businesses.

“While Government figures show that two-thirds of large businesses and three-quarters of SMEs have experienced some form of cyber-attack, RSA’s research found only nine per cent of businesses have cyber cover in place, and only 26 per cent said they are concerned about the threat posed by a cyber-attack.

“Businesses’ lack of protection against cyber threats is echoed by Government data, which found that approximately one third of firms had formal written cyber security policies and only 10 per cent had an incident management plan in place.”

Mr White said: “Although Yorkshire SMEs consider themselves more vulnerable to a large unexpected bill when compared with the UK average, a vast proportion of small businesses in the region are not protected against their top risks.

“Not all risks are directly insurable, but there are steps businesses can take to alleviate the potential impact they could have, such as by implementing rigorous risk management strategies or taking out business continuity insurance.”

He added: “The onus is not only on SMEs themselves to better manage their risks, but also on brokers and insurance providers to proactively help SMEs to better understand the risks they face, and what they can do to protect themselves against them.

“In the Future Impacts report, RSA has devised a number of recommendations demonstrating what insurers, brokers, government and SMEs themselves can do to subvert this trend and help strengthen UK businesses.”

IN its Future Impacts report, RSA calls on the Government to resist the temptation to raise Insurance Premium Tax from 12 per cent in future Budgets.

RSA also wants the Government to build post-Brexit opportunities by cutting red-tape and helping small businesses to keep growing. The report urges the Government to ensure that the UK remains a global economic leader. RSA wants the UK to be at the forefront of responding to cyber threats while maximising digital opportunities.Earlier this week, Prime Minister Theresa May said that the UK was making “significant progess” to prepare for Brexit negotiations, which she intends to launch under Article 50 of the EU treaties by the end of March 2017.