How will Brexit affect UK SMEs hiring EU freelancers?

Currently, 97 per cent of British SMEs outsource 10 to 40 per cent of their work to contractors in the EU. How will Brexit affect SME hiring?

Whether for or against, with almost a year passing since the British vote to leave the European Union, and businesses across the UK have had time to get used to the idea of Brexit.

While only 13 per cent of small business survey respondents currently export to Europe, the vast majority hire freelance contractors from European countries to work on projects on a regular basis.

Currently, 97 per cent of British SMEs outsource 10 to 40 per cent of their work to contractors in the EU.

With the course of negotiations and discussions over a ‘hard’ or soft’ approach looming large in every political party’s general election manifesto, PeoplePerHour (PPH) ran an analysis of what UK SMEs want in terms of the future of hiring freelancers from within the EU. The result is a mixed picture.

Only a few (3 per cent) hired more than 50 per cent of their labour from the continent, but with all study participants issuing at least 10 per cent of their projects to European professionals, there is some concern about the potential for increased bureaucracy that Brexit may bring; almost half (47 per cent) believed that this may discourage them from using freelancers going forward.

More positively for the freelance community, the study revealed that in light of the uncertainty surrounding Britain’s exit from the EU, almost two in three SMEs stated that they would be more likely to work with freelancers while the transition takes places, and more than half (56 per cent) said that they are likely to spend more money hiring freelancers during that period.

This could be very good news for British ‘gigsters’, particularly given that almost the same number have concerns about the potential additional costs involved in transferring money from the UK to the EU.

“Not surprisingly, it’s the financial impact of Brexit which most concerns the small and medium enterprises of the UK. While exporting isn’t really an issue for most, the potential hike in the cost of hiring overseas talent – not to mention the inevitable added bureaucracy – is a real concern,” Xenios Thrasyvoulou, founder and CEO of PeoplePerHour, said.

“The UK, will of course try to make agreements that will eliminate these problems but nothing is for certain. Having said that an advantage could be that employment law control will be returned to the UK which may make it more appealing to set up a business here.”

Other issues which worried SMEs over Brexit were the likely difficulties of financing their business (this concerned 63 per cent), and the possible increase in airfares (a fear for 14 per cent), while only 27 per cent thought that Brexit would benefit their business in any way.

According to Thrasyvoulou, the onus is on the next government to address business concerns of SMEs unsure of where they stand in terms of hiring from the EU. “It’s crucial that the next government make the impact of hiring European talent, both in terms of red tape and costs, absolutely clear so that businesses can plan for a Brexit Britain.”

Praseeda Nair

Kellen Rempel

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.

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