Government triggers Brexit: What does this mean for SMEs?

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The process of the UK leaving the European Union (EU) has finally begun, with the prime minister giving official notice under Article 50 of the Lisbon Treaty.

Since the referendum vote in June, there have been plenty of heated debates about the implications for the country, along with legal challenges and even calls for the verdict to be ignored.

But only now has the government actually set in motion the formal process of pulling out of the EU and made Brexit a reality.

Of course, this is a seismic development for small and medium-sized enterprises (SMEs) in particular, so how exactly do they feel about all this?

Well, a survey by npower Business suggests they are actually quite divided when it comes to optimism for the future.

Some 36 per cent of SMEs feel more confident about their growth prospects in 2017 than they did last year, partly as a result of Brexit.

However, 25 per cent feel the other way, with two-thirds of these putting it down largely to concerns about leaving the EU.

The findings are perhaps not a surprise, as the close referendum result pointed towards a split right down the entire country, not just the business community.

This means those involved in the Brexit negotiations have a particularly difficult job on their hands, as they not only try to get the best deal for the UK, but also appease some vocal critics.

And crucially, SMEs will want clarity over the future operating environment as soon as possible - a point made today by the Federation of Small Businesses (FSB).

Mike Cherry, national chairman of the body, commented: "On the day Article 50 is triggered, small businesses are calling out for clarity on how this will impact how they run their business. 

"FSB members that export and import now need confidence that they will still be able to trade on the same terms. 

"Those that employ non-UK EU citizens in their workforce will want early assurance they will remain, and that hiring new staff will not mean a new system with extra costs and burdens."

Mr Cherry insisted that the government must aim to deliver a comprehensive free trade agreement with the EU "based on ease and cost".

Ministers were also urged to subsequently support small businesses so they can take advantage of new trade agreements with priority markets across the globe.

This includes the remaining members of the EU single market, as it is still the "top market of choice" for many small business exporters in Britain.

"One-third of exporting small businesses have told us they would be genuinely deterred from trading with the EU if a tariff of between two to four per cent was imposed on trade between the UK and EU," Mr Cherry observed.

However, he said the small business community is also keen to focus on major markets further afield, in particular the US, China, Canada and Australia.

Mr Cherry also insisted that having access to "the right skills at the right time" will be crucial to SMEs in a post-Brexit Britain if they are to succeed.

He noted that one in five FSB members currently employ EU citizens who are not from the UK and described these workers as "vital to the UK economy".

As a result, he is keen for the government to guarantee the right to remain for these citizens at the earliest opportunity "to provide reassurance to smaller firms and their workforces".

Mr Cherry went on to stress that the voice of small businesses must be heard throughout the negotiation process and that the final outcome must be good for UK-based companies.

The British Chambers of Commerce is equally keen to see clarity on what operating conditions will be like in the wake of the UK's departure from the EU.

Indeed, director-general Adam Marshall said that with the negotiations set to commence, businesses in Britain and their trading partners in Europe both "want answers to practical questions, not political posturing".

"A pragmatic and grown-up dialogue on the real-world issues, rather than verbal volleys between London and Brussels, would give firms greater confidence over the next two years," he commented.

He added that concluding exit and trade negotiations at the same time would help to moderate the cost of adjusting to the post-EU landscape, as well as enable trade between UK and EU companies to carry on with less disruption.

With the process set to go on for up to two years, perhaps only one thing is certain - Britain's business leaders will be forcefully putting their cases forward and lobbying hard to get what they want from Brexit.