As the market flounders in the wake of last week’s seismic Brexit vote, a UK academic and entrepreneurship expert has said that UK entrepreneurs have what it takes to ride out the Brexit blues.
According to Professor Jonathan Levie, Director of Teaching at the Hunter Centre for Entrepreneurship, University of Strathclyde, two thirds of UK entrepreneurs currently sell their products beyond the UK’s shores, which means that they are unlikely to escape the effects of the referendum.
“A poll by the Global Entrepreneurship Monitor (GEM) in 2015, revealed that 65% of UK early-stage entrepreneurs export or expect to export at least some of their goods and services – placing the UK in the top quartile of 60 countries participating in the survey,” said Levie.
“Exporting entrepreneurs may gain a short-term dividend from the devaluation of sterling as a result of the Brexit referendum, but their ability to maintain exports in the longer term will depend on how quickly the UK can negotiate new favourable trade arrangements with its trading partners,” he said. “Importing entrepreneurs will find their costs rise and in the longer term, there could be delays in imports if free trade agreements unravel.”
Levie added that another issue that Britain’s entrepreneurial ecosystem may face post the referendum is the funding of entrepreneurship training, much of which comes from European Union funding programmes. “Many British firms also benefit from pan-European, EC-funded business collaboration programmes. A question mark hangs over whether British firms will be eligible to join such consortia in the future.”
Investment funding and access to talent is also a concern. In an interview with the BBC this week, Techcrunch’s editor-at-large Mike Butcher, said he has profound concerns about the here and now for tech entrepreneurs in the country – specifically because he has seen funding being frozen or withdrawn since the referendum results. He added that UK entrepreneurs also needed access to European talent to thrive.
“Without access to EU talent, many early stage firms will struggle to find the talent they need,” he said.
Nevertheless Butcher, in common with other tech entrepreneurs, said he remains optimistic about the UK’s long-term prospects. The latest GEM data shows that the UK compares favourably to Germany in terms of early-stage entrepreneurial activity but still lags behind the US. A total of 1 in 5 individuals of working age in the UK were engaged in some type of entrepreneurial activity in 2015, or intended to start a business within the next three years.
Ironically, immigrants, i.e. people who live in the UK but were born overseas, and returned UK-born emigrants have a significantly higher rate of Total Early-Stage Entrepreneurial Activity (TEA) at 15.4% and 10.5% respectively of the total working age population than the life-long resident population (5.3%). Levie worries that a reduction in migrant flows will affect overall entrepreneurial activity in the long term. “But in the short term, there is also a danger of talking ourselves into recession,” said Levie. “The biggest concern at the moment is actually the uncertainty surrounding the situation. The quicker the government can let entrepreneurs know what the future holds the better. In the meantime, we must rely on the natural innovative potential of our entrepreneurs to ride out the storm.”