More firms urged to prepare for Brexit

26th February 2019

Businesses in the Highlands and Islands are being encouraged to plan for the impacts of Brexit.

Highlands and Islands Enterprise (HIE) has made the call following the findings of the agency's latest business panel survey, carried out in September and October 2018.

More than two-thirds (70%) of firms who took part in the survey highlighted Brexit as one the main risks they face, and only 13% stated it posed no risk to their business. More than half (58%) felt leaving the EU posed risks of changes in regulations; 53% were concerned about import tariffs and 53% felt it could also lead to change in funding policy.

Despite this, the survey showed that only 17% of firms have a plan in place to help them prepare for Brexit, and a further fifth (20%) recognise that they need to develop a plan.

In January, 25 delegates attended HIE's ‘Get your business-Brexit ready’ workshop. This covered topics such as communication with suppliers and customers, customs, documentation and workload. The agency also ran a free webinar on 25 February to help businesses prepare for Brexit.

The survey suggests potential for increased competition in domestic markets as more businesses seek to grow their markets within Scotland or the UK to counter the impacts of Brexit.

Carroll Buxton, HIE’s director of regional development, said:"While there is still a great deal of uncertainty about how Brexit will affect businesses in the region, some are already taking steps to prepare, and we would encourage others to do so. There is help available on the Prepare For Brexit website and from our own website. Through these, businesses can access expert advice to help them plan, including a handy 15-point Brexit check list. There are also links to events that can help firms target new markets at home and overseas."

Rural Economy Secretary Fergus Ewing said:"This survey demonstrates again the level of worry amongst Scotland’s business community, thanks to the continuing uncertainty around Brexit, with companies in the Highlands and Islands understandably very concerned about the potential impact that potential changes to regulations, the introduction of tariffs, and increased competition in the marketplace could have on their business. What is certain is that trade with our single biggest partner is going to become more complicated, more time consuming, and possibly more expensive.

“Clearly the best option for Scotland’s rural economy would be to stay in the single market, but if we have to leave then businesses must prepare as best as they can. I would encourage them to engage with an HIE workshop if possible, or familiarise themselves with the 15 point checklist on the Brexit-ready website."

In addition to questions on Brexit and international trade, the business panel survey covered core issues such as economic confidence, business performance and optimism. It also explored a range of themes such as risks and opportunities; growth and business values; and productivity and competitiveness.

Almost two thirds (63%) said they were confident in the region’s economy and 80% were optimistic about their own performance and prospects. However, confidence in the Scottish economy, appeared to be at its lowest recorded in the surveys since 2016.

Increased costs (88%) and political uncertainty (79%) were seen as the greatest risks facing the region’s businesses. Loyal customer base (85%) and increasing demand (80%) were seen as the greatest opportunities.

More than a third (34%) of business that took part in the survey were trading internationally, with those with upwards of ten employees more likely to be doing so. Respondents had mixed views on the importance to their business of access to the European Single Market. Just over half (55%) regarded this as important while 41% said it is not important.

However, a higher proportion (79%) considered the single market important to the Scottish economy overall; higher than the level reported in the previous survey.

The free movement of people across the EU was also viewed as more important to the Scottish economy than to respondents’ own businesses. Most (86%) felt this was important to the Scottish economy compared with 9% who felt it was not important. Only two in five (41%) felt it was important to their business, while over half (57%) felt it was not.

Producing quality goods and services was given as the top business value by almost all (96%) of respondents, followed by maintaining a good work-life balance (93%). Quality goods and services was also viewed as the main aspect that gives firms a competitive advantage, and 94% of businesses said they had taken action in the past 12 months to improve their competitiveness.

Aspiration to grow was reported by 56% of respondents, and this was more so in firms with 25 or more employees.

Collaboration between businesses was a common theme, with 67% saying they were collaborating, or were likely to collaborate, with other firms. Networking to identify new opportunities and sub-contracting were reported as the most popular ways in which businesses collaborate.

Carroll Buxton added:“The information shared by businesses through our surveys continues to be critical in helping us to respond to the challenges and opportunities facing our regional economy.

“The confidence businesses have expressed in the region’s economy and their continued optimism is particularly encouraging given the uncertainties many of them face this year.

“Our work in supporting businesses going forward includes identifying new markets in Scotland, the UK and overseas, and the adoption of new technologies to help increase competitiveness.”