It’s not an overstatement to say that 2018 has been a tumultuous year for British businesses. From Brexit uncertainty, complex regulatory change and tough conditions for the construction sector to a summer buoyed by football success and some marvellous (but very un-British) weather, it’s been a mixed bag for the SME sector in particular. We take a look back at some of this year’s pivotal moments.
Q1: Spring support follows Carillion collapse
The year started with the surprise – and disastrous – collapse of construction giant Carillion in January. Not only did this leave more than 20,000 employees facing unemployment and a £148m bill for the taxpayer, but also up to 30,000 businesses were owed approximately £1bn in unpaid, late invoices. For affected SMEs a lifeline came in the form of British Business Bank relief, and the lesson that due diligence is just as necessary when working with a large company as a smaller one.
Despite the anxiety caused, there was some good news from the whole episode. Other big businesses were put under a microscope and the issue of late payments became national news. The Chancellor subsequently committed to an in-depth review of the late payments culture that exists in the UK in the Spring statement; a move that could benefit millions of smaller companies.
Q2: Regulation overhaul
April brought a number of regulatory changes for UK business. Pensions reform had perhaps the biggest impact on the SME market, as smaller companies up and down the country increased their employee contributions. Via a salary sacrifice system – saving national insurance contributions – most SMEs coped with the costs, but the administration involved added to an already huge pile of paperwork that smaller business owners had to deal with.
There was only one thing on the minds of business owners in May – GDPR. At its core, the regulation aimed to simplify data security for consumers and businesses, so everyone can benefit from the digital economy. However, for many SMEs this equated to a complete overhaul of data security throughout their business, a costly process to say the least. Despite the risk of €10 million fines, more than a third of businesses still weren’t compliant by the end of the summer due to a lack of understanding of what the regulations really meant.
Q3: Summer boost
After a relatively dark spring, the unprecedented sunshine brought with it a much-needed boost for many. The constant stream of football over the summer, along with the warm weather, had a positive impact on supermarkets, pubs and the high street.
Adding to the summer’s bright spot for SMEs, small business owners finally got clarity on the Government’s ‘Making Tax Digital’ (MTD) initiative, with time to spare ahead of April 2019, when the new rules are set to kick in. Crucially, guidelines were published on how SMEs can ensure they are compliant with the new rules, which is spawning a number of software packages to take the hassle out of the whole system.
Q4: Buoyant budget precedes Brexit chaos
An early Budget speech – the final one before Brexit – saw another boost for the UK economy. From cutting business rates by a third for independent high street companies, to raising the Annual Investment Allowance, it was a largely positive experience for SMEs. There were of course some concerns – the CBI highlighted the need for much more support for the high street. However, many businesses will have been pleasantly surprised at being on the receiving end of such supportive measures.
We of course can’t take a look at this year without mentioning the one big constant of the year – Brexit. After almost two years of uncertainty, the structure of the deal is starting to take shape – in the form of a 585-page withdrawal document! What the deal will ultimately look like is still not clear; the only thing that everyone can all agree on is the need for clarity. A few early predictions however, are possible:
- A skills shortage for some sectors as EU workers migrate back to the continent
- Import and export tariff challenges, as the system is worked through
- A weakened pound – great for exporters but not so good for those buying supplies in
So, after what has been a year of highs and lows, we’re looking ahead to an interesting year in 2019.