Small businesses are likely to be hit hardest by Brexit disruption –

Small businesses are likely to be hit hardest by Brexit disruption –

Secondly, while the scale and bargaining power of individual large corporates and investors mean that many of them would be able to navigate the wholesale banking impacts of a hard Brexit, SMEs would undoubtedly find it harder. That’s because not only are SMEs more likely to find their access to wholesale banking services restricted, but the cost of making adjustments – such as forming new banking relationships – can be material for them. SMEs tend to choose a local bank and stay loyal to them. In fact, 60pc of SMEs currently only use one bank for their business banking because of higher costs and greater difficulty than large corporates when building new relationships.

In the event a local UK bank chooses not to establish a subsidiary in the EU27, or that a hard Brexit results in banks having to change their services for existing customers, developing a new banking relationship could be time-consuming, taking anywhere from six months to replicate what SMEs currently do in the UK.

Thirdly – and crucially given the above – 55pc of the SME participants who commented in the report admitted that they had made no plans so far for Brexit. Worryingly, the assumption from corporates – small and large – is that their banks will continue to provide financing and be there in the same guise. Some 44pc of the SMEs interviewed expect their banks to absorb any additional costs caused by Brexit.

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