Small firms at risk as Brexit UK ‘talks itself into recession’

Small business owners fear the nation is “talking itself into recession” as consumers delay spending due to Brexit uncertainty.

Wednesday, 6th March 2019, 12:39 pm
Updated Wednesday, 6th March 2019, 12:43 pm
Remain supporters shelter from the wind and rain across the street from the Palace of Westminster, London. Photo: Jonathan Brady/PA Wire

Some bosses think that negative talk about the possible impact of Brexit on the economy is becoming a self-fulfilling prophecy that will drive some firms out of business.

And they are urging consumers to spend now before prices potentially go up and refuse to bow to “scaremongering.”

Sheffield Chamber chief Richard Wright.

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Their troubles mirror  that of big businesses including Honda, which is closing its UK plant, and Nissan, which has cut investment, but at a much smaller scale.

In a discussion on business editor David Walsh’s LinkedIn page, an insolvency practitioner said: “I can tell you business owners are concerned about Brexit and this has been our busiest January and in the first week of February we had three liquidations.”

Peter Kennan, Sheffield City Region private sector board member (transport), said: “We need to grow our GVA/GDP. If everyone does their bit then we can. If everyone freezes and does nothing, then we are in serious trouble.”

An IT specialist said simply: “That’s how recessions start!”

But a lighting specialist posited a different scenario: “Imagine you had never heard or read a media post or report suggesting that Brexit will harm the economy. Would you delay the investment? The collective effect would be to shrink the economy.

“Imagine if all media regarding Brexit had suggested fast economic progress. Many would invest with confidence and the collective effect would be an economic boom.

“The media and social media play a huge part in influencing the confidence of their audience. Either way, their predictions can become a self-fulfilling prophecy.” 

The MD of an appliance firm stated: “UK growth is outpacing that of central Europe, unemployment is at lower levels too. Interest rates remain low.

“I’m not implying all is hunky-dory (it never is) but I wouldn’t put spending on hold for this specific reason.

“Businesses that I talk to across the UK are concerned with more specific issues like the future of retailing in the UK, energy prices, fake news, social media marketing, team engagement. Can’t wait for the media and our policy makers to move on.”

A chief technology officer at an IT firm said: “Tragedy of the commons. One person cuts their spending: sensible. Everyone cuts their spending: disastrous. One person stockpiles their groceries: cautious. Everyone stockpiles their groceries: chaos.”

A bathroom company chief executive added: “Scaremongering is a bad thing, don’t people realise we have been in a recession since 1708. If you have the money spend it don’t wait for something that may or may not happen.” 

Richard Wright, chief executive of Sheffield Chamber, said: "If you want to keep money moving get wealth to the poorer in our society. They will spend it because they have to. What actually happens is the majority goes to the higher skilled and generally better off who are feeling all the uncertainty of Brexit and so tend to save some money for a rainy day. Guess who suffers first? It’s the micro and small businesses who supply the person in the street directly. In the longer term it also hits the businesses supplying OEM's who are not investing due to the same uncertainties.

“We need to learn to not see change as a disaster. As many people benefit from change as suffer from it. It’s a different narrative but one which might mitigate the boom and bust which has characterised our lives for so long.”