Brexit countdown: Half of SMEs expect profits to fall

Almost half of small and medium-sized firms expect their profits to fall as a result of Brexit, according to a survey of employers in the sector.

Brexit countdown: Half of SMEs expect profits to fall

The research, conducted by Isme, the Irish Small and Medium Enterprises Association, finds that one in six such companies expect some reduction in staff numbers as a result of Britain leaving the EU.

Isme got replies from 1,416 of its members to the survey, carried out in the second week of March.

It said 68% of the replies came from the services sector; 9% from distribution; 4% from retail; 16% from manufacturing; and 3% from construction.

The survey posed six questions focusing on staffing, turnover, profitability, imports, exports, and relocation post-Brexit.

While many companies appear to feel that Brexit will have little impact on their operations, it is clear that a number are facing a difficult trading environment when Britain leaves the EU.

Just under half (42%) admitted they expect a fall in their turnover, while only 11% said Brexit could lead to an increase.

In turn, 48% of the respondents said they expect their profitability to fall by anywhere up to 20%.

Furthermore, 17% of the companies said Brexit will lead to some reduction in staffing numbers, with 7% saying that the fall could be more than 10%.

A quarter of the companies who replied said more than 20% of their imports or purchases were sterling denominated or from Britain, and 11% said they are considering relocating a part of their business to Britain as a result of Brexit.

Isme said that while the survey indicates Brexit will not impact most of its members, the results come with a health warning.

It said: “They may not represent the broader sectoral impact of Brexit on the SME sector. Isme membership is over-represented in the services sector, by comparison with the CSO breakdown of the 238,000 enterprises in the Irish economy. “

Isme chief executive Neil McDonnell said: “We believe that the services, financial, and insurance sectors on aggregate will have a lower level of direct exposure to Brexit-related impacts than will the industrial, construction, and distribution sectors.

“This does not negate the Brexit-related uncertainties and challenges SMEs face across the country, particularly those in border counties. Services businesses in border counties may be more badly affected by Brexit than other businesses.”

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