Small to medium-sized enterprises, or SMEs, are in many ways the engine of the British economy. They account for more than 99% of all British businesses, and three-fifths of private sector jobs. They’re responsible for everything from a significant part of the tax take to a good chunk of British jobs – and for that reason, it’s worth keeping an eye on what the prospects are looking like for these firms.
With that in mind, what is the SME scene going to look like in 2020? Will there be a rise or a fall in the number of small businesses? This article will explore what the current predictions look like, and what the overall issues are.
Predictions so far
There is, of course, no way to predict the exact number of SMEs that will be in operation in Britain in 2020. However, a range of predictions have been made about what the SME landscape might look like then. One such figure, from Santander, is optimistic: it suggests that leaders in the SME world are forecasting that growth will get higher and higher over the course of the coming half-decade! With small businesses in particular predicting a rise of 69% in terms of turnover, the outlook is fairly positive.
The role of Brexit
However, there’s no way to understand the outlook for SMEs in 2020 without first analysing the role that Brexit might play. In an age when facts are sometimes a little thin on the ground, it can pretty quickly become hard to distinguish between one narrative and the next. One side of the Brexit debate claims that leaving the EU will open up SMEs to a whole new world of potential trading partners, and cut back on supposed Europe-imposed red tape. The other side claims that the economic cost of leaving altogether could wipe out SMEs, and halt everything from start-up grants to R&D funding.
Perhaps the most perceptive way to look at it is by sector. For some SMEs, especially those that rely on either European material components or skilled European staff members, the impact of leaving without a deal could be disastrous. For those firms that do very little importing and that use supplies that are largely made in Britain (or, conversely, are internet-based and use ‘supplies’ that are digital in nature), it may not matter too much exactly what sort of deal is reached and when. In short, it’s still too early to tell. There’s no consistent mode of preparation, either – suggesting that there’s no fixed ‘SME view’ on what will happen. Some firms are downsizing and moving items into storage units – while others are expanding by the day!
A new government?
However, Brexit isn’t the only potential change on the horizon that could affect businesses of this size. With the general election underway and the parties now releasing their manifestos, it remains unclear what the regulatory landscape could look like next year. The Conservative Party has historically championed small businesses through everything from tax regimes to investment pledges – but with a planned corporation tax cut now shelved and a perception among some that the Tories are just the party of the super-rich rather than SMEs, how Boris Johnson’s policies could play out for smaller firms is not clear.
The Labour Party, meanwhile, has hinted that it will help SMEs and go after larger businesses in terms of ensuring that taxes are paid and that workers’ rights are upheld. However, with perceptions in some quarters that Labour’s policies on everything from the gig economy to corporation tax could harm people who are self-employed, it’s also not clear what the consequence of a Jeremy Corbyn government would be for SMEs! As a result of this kind of uncertainty, many small business owners now appear to be holding off making any significant decisions about expansion until the outcome of both the general election and Brexit is more fixed and secure. That way, decisions can be made in a much more informed manner.
With SMEs being responsible for so much, it’s important to fully understand what the sector might look like by the time next year rolls around. While there are some predictions that growth is on the way, it’s never possible to tell for sure – especially with Brexit and the general election. On the whole, however, many people are cautiously optimistic about the sector and its chances – and will fight to ensure that no matter what happens in politics, there will always be a space for smaller firms in Britain’s economy.