SMEs have increased borrowing and insurance cover to prepare for Brexit
But SME optimism has grown following the decisive General Election result
More than one in three small and medium-sized firms plan to increase stockpiling for Brexit in 2020 following the UK’s formal departure from the European Union at the end of January, new research (1) from the UK’s leading premium finance company, Premium Credit, shows.
Its study found 34% of SMEs expect to increase the amount and value of goods they have stockpiled specifically for Brexit – and this stockpiling is having an impact on business borrowing and cashflow.
Overall, nearly six out of 10 SMEs (58%) have increased their borrowing to fund Brexit preparations – the average small business has taken out around £4,700 in additional credit with nearly one in 10 increased borrowing by more than £10,000.
And more than a third of firms (35%) say they have increased some aspect of business insurance cover to help prepare for Brexit with a knock-on effect on cashflow.
However, the General Election result and its likely impact on the Brexit process has boosted SME optimism - 58% of firms say they are optimistic for their own future while 55% believe the Election result will help boost the economy as a whole.Adam Morghem, Premium Credit’s Strategy & Brand Director said:
“SMEs have been trying to prepare for Brexit for more than three-and-a-half years and the Election result has delivered some certainty on the departure date although it is clear that a degree of uncertainty remains and trade deals still need to be negotiated.
“Stockpiling is still a major issue for firms with more than one in three continuing to invest in goods with a knock-on impact on insurance cover and cashflow. Firms are increasing borrowing and taking out more credit to manage the transition.
“It makes sense for firms to be prepared but they should also check with their insurance brokers to make sure their stockpiled goods are properly insured.”
Premium Credit research (2) in July 2019 found around 34% of SMEs were stockpiling ahead of the October 31st deadline compared with nearly half (48%) who were stockpiling before the original March 31st deadline last year.
Brexit preparations have had a major impact on businesses, the study found. Around 26% of firms say it has led to profits falling and recruitment freezes while 24% blame Brexit preparations for contracts being delayed and 23% for sales falling.
(1) Independent research conducted by Consumer Intelligence online among 145 SME owners and managers between December 13th and 17th , 2019
(2) Independent research conducted by Consumer Intelligence online among 1,052 adults aged 18-plus in July 2019
It makes sense for firms to be prepared but they should also check with their insurance brokers to make sure their stockpiled good are properly insured.