Majority of SMEs back closer EU trade ties, even at cost of more regulation

Almost three-quarters of UK SME leaders believe the UK should pursue a closer trading relationship with the EU, with six in ten willing to accept greater alignment with EU regulation to make that possible, according to new research from iwoca.

The survey of more than 1,000 UK SME owners, released to mark the tenth anniversary of the 2016 Brexit referendum, found that 74% of respondents support closer trade ties with the EU, while only 18% disagree. Around 60% said they would accept greater EU regulatory alignment if it helped strengthen the trading relationship.

The findings also suggest business opinion has shifted significantly since the referendum. If another vote were held tomorrow, 62% of SME leaders said they would vote for the UK to rejoin the EU, compared with 29% who would choose to remain outside the bloc.

Despite Brexit’s promise of greater regulatory freedom, many businesses report the opposite experience. Just 16% of SME leaders said leaving the EU has had a positive impact on their business, while 35% said it has been negative. A further 44% said Brexit has made little difference to their business.

Among those reporting a negative impact, more than half (55%) said they now face more rules and regulations than before Brexit, making it the most commonly cited challenge. Meanwhile, 45% said hiring workers from the EU has become more difficult, while 43% reported increased barriers to selling goods and services overseas.

Support for rejoining the EU was evident across every region of the UK, with at least half of SME leaders backing re-entry regardless of location. Wales and London recorded the highest levels of support, with 69% of SME leaders in both regions saying they would vote to rejoin.

In England, where 53% of voters backed Leave in 2016, 62% of SME leaders now say they would support rejoining the EU, compared with 30% who would vote to remain outside.

Christoph Rieche, CEO and co-founder of iwoca, said: “The message from British SMEs is clear. Anyone serious about economic growth needs to put a closer relationship with the EU back on the agenda.

“As a British-German business with offices in London, Leeds, Frankfurt and Berlin, we see this on both sides of the Channel every day. The economy has always been more pragmatic than politics. Small business leaders are not asking for a political project – they want reliable conditions to hire, trade and grow, and ten years on, Brexit still hasn’t delivered them.”