Small and medium-sized enterprises (SMEs) in the UK will hit a 'BRIC' wall if the country votes to leave the European Union, according to research by insurers RSA.
The research found that whilst SMEs do want to expand into emerging economies, they remaining dependent on trade with the EU, which could be put in jeopardy if the UK leaves the EU.
More than four in five (82%) of those surveyed said they see European markets as important to their growth, with 52% of those labeling them as "very important".
More than half (56%) of SMEs complained that uncertainty around the potential Brexit is already holding back their growth and 55% say that the government is not supportive in dealing with the issue, with two thirds (66%) calling for greater clarity now on the UK’s future role in Europe.
Three-quarters (74%) of SMEs believe the perception that small businesses are local by default is outdated and damaging, with the same proportion saying that international growth is important to their business and nearly nine in ten (88%) stating that international growth is increasingly important to SMEs as a whole.
Four in five SMEs believe that accessing new markets is important to their business (47% very important), with the same proportion stating that accessing new customer bases in emerging markets is critical. SMEs consider North America (67%) their most important market opportunity, followed by Asia Pacific (61%), the Middle East (59%), South America (58%) and Africa (54%).
But while 85% of small business leaders believe SMEs are more globally-minded than ever before, the export potential of SMEs is bounded by the EU – with 72% of UK SMEs struggling to export beyond EU borders. The New Internationals
study reveals major barriers to seizing global growth opportunities, particularly outside of the EU, including red tape (62%), lack of funding (58%), lack of access to information (53%) and their own lack of international experience (61%). Three quarters of SMEs say that there is less support available when exporting to emerging economies, despite the considerable growth opportunities they present.
David Swigciski, SME director at RSA, said: “The UK’s SMEs are stuck in the gravitational pull of the EU. Current Government export support isn’t working for our smaller businesses, who are struggling to trade beyond Europe.
“Not only are our SMEs missing out on growth markets, they face significant risk from uncertainty over a possible Brexit and our future relationship with Europe.
“SMEs are telling us that the perception of the UK’s small businesses as corner shop owners is outdated and damaging. We need a 21st century framework for the 21st century SME. Government policy needs to be updated to support our internationally-minded business community if SMEs are not to be caught between the rock of the BRIC wall and the hard place of Brexit uncertainty in their core EU markets.”