Small businesses are optimistic post Brexit. Here's why that won't last

Lack of skilled staff rated as the biggest impediment to growth

Will these small businesses feel optimistic next year? (Ben McMahon)

Time for a little optimism amid the Brexit induced economic carnage?

According to Albion Ventures, a venture capital firm, nearly three-quarters (73 per cent) of small businesses with over five employees plan to grow dramatically or moderately over the next two years, which is down only slightly from last year’s 75 per cent.

When I see headlines like that atop press releases I usually have a dig around in the guts to check out the survey details. Not all of them are terribly trustworthy.

This one, however, was conducted by a reputable polling organisation (YouGov) which took what it says was a random sample of the owners of 1,014 small and medium sized enterprises during the third quarter of this year (so after the Brexit vote). It has done this for the last few years for the purposes of a report that Albion produces.

Brexiters might have cause to feel cheery as a result of this. Look, see, we'll be alright after all. Small businesses are the engines of growth. If they’re optimistic and happy, then the rest of the UK can feel optimistic happy and those arguing otherwise are just Jeremiahs.

Well, up to a point. You see there are catches.

For a start, when the pollsters asked about the EU, a majority (41 per cent) felt the result of the referendum would hinder their prospects of entering new markets against 36 per cent who thought it would help.

When YouGov broke the results down into different segments the results tended to resemble the demographic and regional splits seen in the referendum. Younger entrepreneurs were more likely to feel the result would hinder prospects, as were those in London, and Scotland. Older business owners leaned the other way.

Things also start to get interesting when you consider the results of asking businesses to rate the greatest impediments to their growth ambitions and expectations.

Finding skilled staff ranked as the biggest, up from third position in 2015 (and 2014). Albion says that’s not necessarily a bad thing: It is a pressure created by economic success after all. And business owners can bring in staff from the EU if they want. Well, they can while there is still free movement of people at any rate.

However, the poll was also taken before the aggressive and deeply unpleasant bout of foreigner bashing indulged in by the Conservative Party at its annual conference.

The most divisive and unpleasant proposal - that businesses would be forced to list their overseas employees - has been rowed back upon by Amber Rudd’s Home Office.

But the damage has been done. If you’re a skilled person and you live on the continent would you be keen to bring your family to a Britain where the Government proposes a measure at one remove from forcing you to wear a badge bering the legend “foreigner”. Or which fans the flames of racism that have led to a sharp, and scary, rise in attacks on European residents since the referendum. A trend which shows no signs of slowing? I wouldn’t.

The survey highlights the problem with the hard Brexit brigade that wants to bring an end to the free movement of people. Incomers are necessary for the continued success of the UK economy that they say they want.

You do rather wonder whether if those businesses thinking that Brexit will help their prospects will feel the same way next year, particularly if Europeans start to shun them when they’re on the hunt for employees.
Of course, by that time the economic damage done the UK plc might result in there being more Brits available to hire as a result of the redundancies caused by small businesses going out of business.

I'd be prepared to stake a decent sum of money that the number of firms optimistic about growing and expanding will be very much lower than the 73 per cent figure I mentioned at the outset when the same survey is undertaken next year.