Beyond Brexit: SMEs and the future of the British economy


19th July 2017SME4Labour held a roundtable discussion in the House of Commons on the role of SMEs in the British economy after Brexit. The event was chaired by Simon McVicker, Director of Policy and External Affairs at the Association of Independent Professionals and the Self-Employed (IPSE), and featured keynote speakers Stephen Kinnock MP (Aberavon) and Martin McTague, National Policy Director of the Federation of Small Businesses (FSB).

See photos of the event here

Stephen Kinnock MP opened by speaking of the increasingly symbiotic relationship between politics and business, and how changes in the political landscape with Brexit would impact upon SMEs. He remarked that the big FTSE100 companies had their voices heard during the referendum last June, but that SMEs - whose voices would have been more relatable to ordinary voters, and whose interests differ to those of big business - were side-lined during the debate.

Mr. Kinnock noted that “all that glitters is not gold” – that while the economy may look OK on the face of it with increasing levels of employment, beneath the headlines lie serious, challenging, long-term structural issues, such as regional inequalities, over-reliance on the financial sector and poor levels of productivity. He posited that following the German model, with strong ties between regional banks and SMEs, would be a possible solution to these issues, and that the state should do more to facilitate SMEs and start-ups. Mr. Kinnock ended his speech by outlining the uncertain and “potentially catastrophic” scenario for SMEs of a ‘no deal’ with the EU, and suggested that a greater focus is needed on working out transitional arrangements within the EEA to build a bridge for business rather than dropping off the much-feared cliff-edge.   

Martin McTague agreed that the interests of SMEs differ to those of large, highly mobile corporations, and that their interests should be heard more clearly – hence the FSB’s role in persuading government to pursue the most business-friendly Brexit possible. Mr. McTague also spoke about the geographical imbalances within the British economy and argued that one of the key issues for SMEs in a post-Brexit settlement would be access to structural funds to redress this. He also argued that while most SME owners are aware of the need for good regulation, there was a widespread perception at the time of the referendum that EU regulations were poorly designed and poorly implemented.

Mr. McTague went on to outline how essential EU labour has been in filling important ‘mid-skill’ positions, such as technicians, and that one-in-five SMEs use EU labour. He argued that market access is essential and put into perspective the importance of the EU to the British economy versus the rest of the world. He closed by agreeing that a period of Brexit readjustment is of vital importance to SMEs who are less able than big companies to adapt to changes in advance.

In the Q&A, Mr. Kinnock speculated whether politics would trump economics in the EU’s thinking with regards to a deal with the UK. He also said that Labour’s General Election manifesto contained some great ideas for SMEs - in particular the £250bn transformation fund - and that he is currently endeavouring to build a cross-party “coalition of common sense” around Brexit with MPs from other parties. Mr. McTague said that he is optimistic that the UK will be in a good situation post-Brexit. Mr. Kinnock agreed – but said that we need a Labour government to make it happen!


Speaker Biographies

Stephen Kinnock is the Labour Member of Parliament for Aberavon, having been elected in 2015. Stephen served as Parliamentary Private Secretary to the Shadow Secretary of State for Business, and is an active member of the All Party Parliamentary Group on Steel and Metal Related Industries, chairing the committee responsible for the recent Steel 2020 industrial strategy report. Previously, Stephen was the Director and Head of Europe and Central Asia at the World Economic Forum, having worked for the British Council for more than 12 years where he held senior UK and international positions in Russia, Sierra Leone and across Europe. In 2012 he took up a position at Xyntéo in London, an advisory company that helps global businesses go beyond the green basics and reinvent the way they grow."

Martin McTague is a graduate engineer and formed his first company in 1987. Since then he has owned and managed several businesses focused on developing new technology and exploiting market opportunities in the Far East and USA. He has been a member of the FSB for 19 years and in that time has focused on lobbying local, national and regional agencies, government ministers and political bodies to prioritise small business issues. His success has been built on 20 years’ experience close to the top of Government and excellent working relations with senior decision makers in No 10, Cabinet Office, BIS, DEFRA, DECC and council leaders in the North of England. He is a currently the FSB’s Policy Director, Director of Northern Business Forum, Member of the National Growth Board; Member of MOD National Employers Advisory Board. Former positions include: Member of the CBI Regional Council in North East; Member of Northern Way Innovation in Industry Steering Group; Member of the Investment Panel at Northern Enterprise Limited.