Many British technology companies are unprepared for the impact of a potential no-deal Brexit, according to a techUK report.

Unless Westminster secures an agreement soon, the UK could crash out of the European Union without a deal on the 31st of October. Concerns over the impact of Brexit upon the UK’s technology sector have been voiced recently, with access to talent and data sharing key talking points. 

The techUK report, however, suggests that a concerning number of small and medium enterprises (SMEs) in the UK’s tech sector have failed to take action or prepare for the impact of a no-deal scenario. 

More than half (53%) of small businesses surveyed by the industry body have not taken any steps to prepare for this outcome; nor have one-third of medium-sized firms. 

More than 60% of both small-and-medium-sized businesses told techUK that they had not taken any steps to prepare because they have been “unable to predict” the implications of a no-deal Brexit. These findings underline both the turbulent nature of the past three years, as well as ongoing confusion and a lack of clear-cut information on the impact of this outcome.

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Just one-third of SMEs told techUK that they were even aware of information provided by the UK Government on Brexit. Similarly, fewer than one-fifth (19%) of medium-sized businesses said they knew about support being offered to prepare for Brexit.

This lack of information has many SMEs across the country left in the dark and is damaging their view of the situation. The study shows that a majority (65%) of small firms do not have a positive view of how Brexit will affect their respective organisations. More than three-quarters (77%) of medium-sized firms also told techUK that a no-deal Brexit will have a “fairly or very negative impact”.

Neil Ross, policy manager for digital economy at techUK, commented: “Small and medium-sized enterprises are the backbone of the UK economy, making up 99% of all businesses. Yet, government finds engaging with them is particularly challenging, with communications significantly weaker than with large businesses.

“This means that the dissemination of information and ability to establish consistent dialogue is harder to achieve.”

Ross added: “In the run-up to a possible no-deal exit on 31 October, it is vital that the concerns of SMEs are recognised by Government.”

An overwhelming majority (90%) of large businesses told techUK that they’ve made significant preparations for a potential no-deal Brexit. Large businesses were, according to the report, more likely to be aware of support on offer from the Government.

What do SMEs want?

When asked what would help lessen the potential impact of Brexit upon their businesses, many respondents told techUK that Government should request an extension to Article 50 to allow further time to prepare.

An extension to freedom of movement rules was also highlighted as an area of great importance for SMEs in the tech sector. Access to talent is a key concern for many organisations, with many facing “significant problems recruiting talent” due to a mixture of competition for domestic talent and the administrative burdens of recruiting non-EU talent.

Additionally, many reported experiencing “depressed recruitment” from the EU due to the uncertainty of Brexit and a perception that the UK was no longer a welcoming country for EU nationals.

One SME leader, who spoke to techUK as part of the research process, said: “The ability to build companies relies on the ability to attract talent. If talent is uncomfortable coming to the UK and instead prefers to locate in Paris and Berlin, then this reduces the competitiveness of the UK’s SMEs.

Another respondent said: “We have had no applicants from Eastern or Mainland Europe in the last two years…culturally, people don’t feel they will be welcome in the UK.”