07 Oct 2014

Research reveals importance of EU membership for 9 in 10 UK SME exporters

• 9 out of 10 SMEs (91%) that are trading internationally export to other European Union nations according to the latest Quarterly Survey of Small Business in Britain from The Open University Business School
• By contrast, just over half (55%) of these SMEs export to North America and a similar percentage (51%) export to countries in the Asia Pacific region
• More than half (57%) of exporting SMEs describe the UK’s membership of the EU as ‘good’ or ‘very good’ for business, while only 6% say it is either ‘bad’ or ‘very bad’; the most commonly identified benefits are trade-related, while ‘red tape’ is the main disadvantage
• More than a third (35%) of respondents see Scotland’s continuing membership of the UK as having either a ‘good’ or ‘very good’ impact on their business

The European Union is the most important export market for UK SMEs who are currently trading internationally according to research published for the last quarter by The Open University Business School (OUBS). The latest Quarterly Survey of Small Business in Britain examines the decisions made by owners and managers of small and medium-sized businesses as they seek to compete in national and international markets, focusing on the implications of the UK leaving the EU on our nation’s SMEs.

The survey of 225 owners and managers conducted in July and August 2014 indicates that the EU is by far the most important export market for the UK’s small and medium-sized businesses, with 40% engaged on a regular or occasional basis and 9 out of 10 (91%) of these firms trading with other EU nations. Only 12% overall believe that EU membership is either ‘bad’ or ‘very bad’ for their business, compared to 40% who say its overall impact was either ‘good’ or ‘very good’.

Government agencies, including UKTI, were the most popular sources of export support services, used by just over a quarter (26%) of exporting firms over the last three years. For many firms, exporting is only a small proportion of their business. However, for just under a quarter (23%) of exporters, it accounts for more than half of their total sales. More than half of those surveyed (52%) have no intention of exporting to other EU nations or outside of the EU.

Dr Richard Blundel, editor of the Quarterly Survey and senior lecturer in Enterprise Development at the OUBS, said:

"All too often, the debate around EU membership is dominated by corporate leaders, largely ignoring SMEs, which account for some 99.8% of all UK businesses. While our report reveals a wide range of views, it’s clear that the majority of the UK’s smaller exporters see EU membership as being good for business. The arguments and counter-arguments will continue, but I expect that small business views will become an increasingly important factor in the debate over Britain's future relationship with the EU.

“Our findings also suggest that the pool of budding exporters is smaller than some policy-makers might hope. The real challenge is to target those with genuine export potential, providing the right environment for them to flourish. ”

Other key findings on the special theme of competing in the EU:
• Those seeing the EU’s impact as largely positive emphasised trade-related issues, including the EU’s capacity to ‘level the playing field’. There are also references to other issues, such as the EU’s capacity to influence working conditions and respondents’ wider political concerns:

‘Overall, I think that being part of the EU is good for business. Big is best when competing in world markets and the EU is a strong trading block. The negative aspects are the OTT rules and regulations that pour out of the EU. Our world competitors in the main do not have all this bureaucracy and it is time that some of this was removed. [However,] I do not want to see sensible standards removed.’

‘Many specialist construction materials and tools are developed in Europe, particularly in Germany; the ease of import, use and specialist assistance would simply not be possible without the EU. The majority of motivated labour comes from EU countries.’

‘Most of our clients are large organisations with substantial EU connections – [leaving the EU] would not be good for them, and hence not for us.’

• The reasons respondents gave for the EU having a negative impact on their business were regulatory burdens and the overall cost of membership:

‘Mountains of red tape, rules and restrictions imposed on business by nameless bureaucrats who have no knowledge or experience of business, but think that they know it all! Local government and Westminster is bad enough, but to add Brussels to the pot makes doing business almost impossible.’

‘Ever demanding EU codes and standards that the UK seems to zealously over-apply can be crippling.’

For a copy of the full report, and supporting case studies**, please visit

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