Research from Visa UK reveals a spike in consumer spending post-referendum, in contrast with consumer confidence studies that predicted a slowdown.
SMEs in the hospitality and e-commerce sectors may thrive the most in the face of UK’s departure from the European Union, with customers spending 8.9 per cent and 2.8 per cent more in July than they have in January, long before the realities of Brexit.
How and what can SMEs stand to gain in this economic period ahead of Brexit negotiations?
Greater face-to-face spending could revive the high streets
The Visa study highlighted that face-to-face spending has increased for first time since April, by 1.6 per cent. If this trend continues, this could signal a revival of high street retail.
“Looking at the sectors, the longer term trend we’ve seen for increased spending on leisure and recreation is enduring,” says Kevin Jenkins, Visa’s UK and Ireland managing director. Jenkins sees this as a potential boost for the high street, citing its strongest annual growth rate in five months, with clothing retailers in particular bouncing back after a fall in June.
E-commerce is borderless: exporting may be more viable
With the falling value of the Pound and uncertainty over trade relations with the EU, there were many concerns for exporting SMEs on what the Brexit vote may bring. According to World First’s chief economist James Cook, the lower value of the Pound could be a “game-changer” for some SMEs. “Previously untapped markets could open up as they become more viable options. In some instances, this could help facilitate significant growth for the most nimble businesses,” he explains.
According to Viscount Matt Ridley, author, journalist, TED Talk speaker and business leader, leaving the European Union opens up opportunities for small and medium sized businesses to strike lucrative trade deals beyond the region. “Europe is run in a top-down way in that is driven in the interests of big companies and against the interests of small businesses…It takes an agonisingly long time to secure trade deals with the EU because there’s always one country that objects,’ he says.
With e-commerce on the rise globally, reaching new markets through the borderless Internet may appear more attractive now to businesses that have shied away from exporting before.
Economic uncertainty could encourage collaboration
According to an annual study by delivery firm CitySprint, 1.45 million SMEs in the UK are seeking growth oversees but two thirds of these businesses are fuelled by Brexit.
After tracking the fortunes and sentiments of SME leaders and owners over the last three years in their Collaborate UK report, CitySprint revealed that 85 per cent of SMEs are sharing skills, expertise, and mutual networks to drive their business forward, and a further 86 per cent say the collaborative partnerships formed in tougher times have placed them in better stead for the future. Clearly this underscores that the businesses that value collaboration the most highly tend to perform better financially and be more optimistic about the future.
For SMEs, collaboration can help boost innovation and productivity. From skills transfer to flexibility, collaborating with competitors, suppliers and other smaller players in tangential sectors can create opportunities to access markets and customers not usually available to individual companies, potentially increasing market share and supporting a healthy supply chain.
The silver lining in the post-referendum period of economic uncertainty may be these three outcomes, potentially catalysing SMEs to grow against all odds.