This quarter, we examine the key decisions made by owners and managers of small and medium-sized business as they seek to compete in national and international markets. The first part of the report reviews recent exporting trends and documents the experiences of current, potential and former exporters. We also ask about future intentions and how smaller businesses might be better supported. Lastly, we examine the implications for smaller businesses of the Scottish independence referendum, the constitutional changes that are now anticipated in its wake, and continuing uncertainty over the UK’s membership of the European Union. Responses from our online survey respondents are complemented by three in-depth case studies.
Key findings include:
- 9 out of 10 SMEs (91%) that are trading internationally export to other European Union (EU) countries. By contrast, just over half (55%) export to North America and a similar percentage (51%) export to countries in the Asia Pacific region
- More than half (57%) of exporting SMEs describe the UK’s membership of the EU as ‘good’ or ‘very good’ for business, while only 6% say it is either ‘bad’ or ‘very bad’; the most commonly identified benefits are trade-related, while ‘red tape’ is the main disadvantage.
- More than at third (35%) of respondents see Scotland’s continuing membership of the UK as having either a ‘good’ or ‘very good’ impact on their business
Those seeing the EU’s impact as largely positive emphasised trade-related issues, including the EU’s capacity to ‘level the playing field’. There were also a few references to other issues, such as the EU’s capacity to influence working conditions and respondents’ wider political concerns:
Many specialist construction materials and tools are developed in Europe, particularly in Germany, the ease of import, use and specialist assistance would simply not be possible without the EU. The majority of motivated labour comes from EU countries.
Most of our clients are large organisations with substantial EU connections - it would not be good for them, and hence not for us.
Overall I think that being part of the EU is good for business. Big is best when competing in world markets and the EU is a strong trading block. The negative aspects are the OTT rules and regulations that pour out of the EU. Our world competitors in the main do not have all this bureaucracy, it is time that some of this was removed. I do not want to see sensible standards removed.
By contrast, the reasons respondents gave for the EU having a negative impact on their business were regulatory burdens and the overall cost of membership:
Ever demanding EU codes and standards that the UK seems to zealously over-apply can be crippling.
Mountains of red tape, rules and restrictions imposed on business by nameless bureaucrats who have no knowledge or experience of business, but think that they know it all! Local government and Westminster is bad enough, but to add Brussels to the pot, makes doing business almost impossible.
SMEs account for some 99.8% of all UK businesses. Our report reveals a wide range of views, but it’s clear that the majority of the UK’s smaller exporters see EU membership a being ‘good for business’. The arguments and counter-arguments will continue, but I expect that small business views will become an increasingly important factor in the debate over Britain's future relationship with the EU.
A special 30th anniversary issue of The Quarterly Survey will be published in December 2014.
Visit the Open University Business School's Quarterly Survey of Small Business in Britain on their website for further information, including an archive of published reports from 1990 to the present day.