After having worked its way back up to some sort of economic stability after the Great Recession of 2009, it would seem that Britain should be optimistic for the economic future of SMEs in the months ahead.
Unfortunately, and even without the uncertainties surrounding Brexit, SMEs are anything but optimistic as four out of five of those polled by ICAS, the Professional Body of Chartered Accountants, fear for the economy going forward. Now with matters compounded over fears stemming from the vote, it does look as though SMEs in Britain are bracing to battle an uncertain economic future, BMM reported.
Growing numbers of company owners and directors are contacting their solicitors because they need answers and many legal teams are already drawing up tentative new agreements set to commence when Brexit is finalized. Amongst those being contacted by panicked business owners is Leeds law firm Ison Harrison.
What started out as vague concerns over trading in a volatile market has escalated as the pound fell overnight the day of Brexit and continues to lose value as the days wear on. If this continues, many fear there will be another recession greater than the last.
Fortunately, this is just the fear of some businesses, private individuals and a few market analysts. Nothing is forthcoming from the government which is why there doesn’t seem to be a reason to panic just yet.
VAT and Import Taxes
This is where concerns over an uncertain economic future have now been focused. Before Brexit, SMEs knew what they were required to pay in terms of VAT and import taxes were not an issue due to internal EU trade agreements among member nations.
Although the government is saying that things will simply go back to the way it was before joining the European Union, many young entrepreneurs were too young to remember those days and aren’t aware of how things were done ‘back in the day.’ This presents a whole new set of worries that is compounding fear over the economic future of the UK.
As legal representatives to a large number of businesses throughout the UK, Ison Harrison is advising clients to take a step back and not to panic. Until the dust over Brexit has settled, much is still just conjecture.
Unanimous Vote
The Bank of England defied predictions by holding interest rates at 0.5%, but signaled action next month, BBC reported.
The BoE’s Monetary Policy Committee sets monetary policy to meet the 2% inflation target and in a way that helps to sustain growth and employment. At its meeting ending on July 13, the MPC voted by a majority of 8-1 to maintain bank rate at 0.5%, with one member voting for a cut in bank rate to 0.25%.
The committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion ($501.5 billion).
Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate. In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the committee expect monetary policy to be loosened in August.
The precise size and nature of any stimulatory measures will be determined during the August forecast and inflation report round.
Sterling had already received a boost this week by Theresa May becoming Britain’s new prime minister, which helped ease the political uncertainty that has dominated since Britain since the June 23 Brexit vote. Last week, sterling sat at a 31-year low of $1.279.
The rise in sterling had only served to bolster the view that the BoE would cut rates this month, as the currency’s rise effectively delivered some monetary tightening in itself.
