But focusing on the reactions of large corporations is to disregard more than 99 per cent of the UK’s private sector. As we were told by Brexiteers before the referendum, leaving Europe would be of particular benefit to SMEs (less than 250 employee businesses), who often gain relatively little from our membership of the EU yet are still held back by its regulations.

Backbone of the economy

According to statistics from the Department of Business, Innovation and Skills, 99.9 per cent of private sector companies in the UK are SMEs, providing 60 per cent of private sector employment and 51 per cent of private sector turnover. In the year following the Brexit referendum, the number of SMEs in the UK rose by 197,000. SMEs make up an important and growing part of the UK economy.
Furthermore, while investments in FTSE 100 and 250 companies have performed sluggishly since the referendum, investments in small businesses have shown more exciting returns. Fund Performance in the UK Smaller Companies sector has gone up 11.9 per cent in the last year, compared to 6.6 per cent for UK All Companies (made up mostly of FTSE100 and 250 companies).
As one IFA has put it, “Smaller companies have not been impacted to the same degree by Brexit. Provided they have good strategies and are well run, they will always find a way to thrive.”

Expect a bounce

The same IFA expressed the opinion that Brexit won’t hit the UK All Companies sector as hard as people think it will because, in terms of share prices, the negativity over Brexit has already been felt. “Once we have a decision we can expect to see a bounce, whichever way that decision goes. These companies and fintech is a great example, don’t just deal with Europe, they deal across the world, and if you look at the developed world, including China, companies grow globally at a pretty similar rate over time. The European and UK equity markets are lagging behind the rest of the world at the moment because of Brexit but they will catch up again over time.”
When the bounce comes, it will be the more agile SMEs such as the movers and shakers in fintech that will be first to react and take advantage of the opportunities thrown up by Brexit, such as the lowering of regulations and the freedom to strike more of their own deals around the world.

Taking a broader worldview

The performance of the UK Small Companies sector can be explained in part by an increase in international sales by UK SMEs since the referendum. Inflation at home and the weak pound have driven the majority of SMEs to focus their sales increasingly outside the UK.

In an increasingly technological world, geographical proximity is of diminishing importance and SMEs are looking to the world’s markets, using IT to build relationships and trade with customers on the other side of the world. This more global view is being embraced particularly among young entrepreneurs, the business leaders of the future.

Millennials may have thrown their collective weight behind the ‘remain’ vote but millennial business owners are looking beyond Europe, seeing Brexit not so much as a narrowing of their world view but a broadening of it. For a generation brought up on the Internet, for whom world travel has become almost a rite of passage upon leaving school, it’s no surprise that young entrepreneurs don’t think of their market as the UK or Europe but the whole world. According to one survey, 67 per cent of UK businesses run by millennials are making between 16 and 30 per cent of their income from global trade.

On this evidence, the key ‘remain’ argument that leaving the EU would threaten roughly half of the UK’s export market appears to be wearing thin.

Faster to change, more global in outlook

While multinational corporations will undoubtedly influence the net impact of Brexit, the cumulative influence of the UK’s growing band of SMEs should not be overlooked. In many respects, these businesses are showing the giants the way, breaking new ground with their use of technology to open up the world and use Brexit as their springboard to new opportunities. The defining moment of Brexit will produce winners who will have acted faster, smarter and leaner and who will have used IT to modernize their transactional, communications and reporting processes. Above all, they will see the world, rather than Europe, as their oyster. Fintech and indeed other SMEs can share in this brave new world of broader-minded business.

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