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17 September 2019

The View from the Chair, Tina McKenzie - September 2019

Operation Yellowhammer reflects reality for small businesses

Given its title and contents we could be forgiven for thinking that Operation Yellowhammer was something from our wartime past, however it is in fact the UK Government’s scenario planning which sets out in stark terms the impact which a no-deal Brexit would have on various aspects of our daily lives. The document reflects the concerns which FSB and our members have been consistently feeding in to policymakers since the referendum result. According to polling of our Northern Ireland members 75 percent of small businesses expect a negative impact from a no deal exit on 31st October and half expect the impact to be significant. While the document outlines risks for the whole of the UK, it singles out Northern Ireland for some particular mentions, including the potential impact on the Single Electricity Market, and subsequent energy price rises for consumers - both business and domestic. While some details of the document were revealed to the press weeks ago, a vote in Parliament compelled the government to publish the document. Other issues around public disorder, the supply of medicine and availability of fresh fruit make for difficult reading. The document makes specific reference to the fact that small businesses are likely not to be as prepared as their larger counterparts. Indeed, this corresponds with our polling which indicates that only one fifth of small businesses have planned or prepared for no-deal, with many still unsure what to plan for despite the information out there.

One area of concern, which has received less coverage than goods crossing the border, is storage, handling and transfer of data between jurisdictions. As the Yellowhammer document makes clear - unless an alternative legal basis for transfer is put in place - data flow from the EU will be severely disrupted. When we asked our members only 1 in 10 were aware of what to do regarding data sharing in a no-deal scenario. The adult social care sector is considered to be exposed to a no-deal outcome with increased staffing costs impacting the viability of businesses. Members in this sector are already telling us that they are already having difficulty finding workers. Meanwhile a third of businesses generally say that both recruiting and retention of EU staff has become more difficult since the decision to leave the EU

While it is one thing to identify problems, it is another thing to try to mitigate damage. Indeed many consequences of no-deal are impossible to mitigate. How can the cross-border food producer stay competitive when their produce is hit by a 40 percent tariff and each item requires a burdensome process to obtain an export health certificate?

Last week, I met the Prime Minister, Boris Johnson and the Business Secretary, Andrea Leadsom as part of an FSB delegation drawn from right across the UK. The primary focus of the meeting was on the domestic agenda, concentrating on important issues such as addressing late payments, improving access to finance for small businesses and boosting infrastructure investment. However, I made clear to the Prime Minister that these welcome policy interventions would only be effective in a ‘deal’ scenario, where a chaotic disorderly exit was avoided. The Prime Minister tried to assure our delegation that all efforts were being made to work towards a deal on which all sides could agree. While there is clearly more work to be done to bridge the gap between UK and EU negotiators, it is welcome that there is constructive engagement in an attempt to find the ‘landing zone’ where agreement can be found. Following the meeting with the Prime Minister I travelled to Helsinki where I met the President of Finland, Sauli Niinistö, and other senior Finnish politicians as part of my role as Honorary Consul for Finland in Northern Ireland. Finland currently hold the EU Presidency so the meetings were both important and timely. It was clear from my discussions that there was a strong desire to maintain a positive relationship with the UK, and that an enormous amount of goodwill and interest in the prosperity of Northern Ireland still existed, following on from Finland’s practical support for the peace process. Business in Northern Ireland has both contributed to, and benefited from, a relatively peaceful and stable political environment. To ensure this continues it is vital that a Brexit deal is agreed, so we can begin to turn our attention once again to how we grow our economy and create a better society for all.