What Happens If the Rules Change? The Impact of Brexit on the Future Strategic Intentions of UK SMEs

The UK vote to leave the European Union (Brexit) in June 2016, was an unparalleled political event with potentially seismic consequences for the economy. Using data from a UK government survey of approximately 10,000 SMEs, this paper investigates which SMEs are most concerned by Brexit and the likely impact of this event on their (self-reported) strategic future intentions related to accessing finance, growth, innovation and capital expenditure. The results of a descriptive analysis suggest that larger, innovative, export-oriented SMEs and those operating in business services perceive Brexit as a major obstacle to the success of their business. The results of a regression based analysis suggest Brexit could potentially result in weaker growth, lower levels of innovation, reduced capital investment and lower access to external finance, especially for innovative and export-oriented SMEs. Importantly, Brexit may have the most significant negative repercussions for the SMEs often viewed as the largest contributors to long-term productivity growth.