Fact/Fiction: Are one in three UK firms planning to leave because of Brexit?

How it was told.

As Nissan goes into reverse and backs out of plans to build the new X-Trail in Sunderland, reports of Brexit driving other firms out of the country was front-page news.

The Guardian put the story “One in three businesses say Brexit poses ‘significant risk’” on the front page of its February 1 edition before Nissan’s devastating blow was announced.

The article used data from the Institute of Directors’ survey of 1,200 company executives to paint a gloomy picture of what lies in store for the British business world after March 29. 

The view that uncertainty from the stalling progress in Westminster led to one in 10 businesses setting up new offices outside the UK also made it into The Telegraph, which opted for the headline: “Third of small firms taking Brexit evasive action, survey finds”.

The Times opted for “Directors’ lobby warns of exodus” and the BBC also warned of firms abandoning the country with “Brexit: Third of UK businesses considering move abroad – survey”.

The Independent took a different approach, focusing on larger companies in “Fifth of large UK firms have already moved operations abroad due to Brexit, new survey shows”.

All of the reports echo the City’s calls for decisive action on Brexit with warnings that all the dithering is making it impossible for businesses to plan and insulate themselves from any market disruption post-March 29. But are as many as a third of UK firms really packing their bags?

Facts. Checked

It’s highly unlikely that as many as a third of the UK’s businesses will relocate abroad – but even if they do, it doesn’t quite tell the whole story of how Britain’s post-Brexit business landscape will look.

It is true the survey shows that 30 per cent of firms have either planned to move outside the UK or have actually done so, while 62 per cent have no plans to leave the country.

Sure, Sony may have moved the UK base to Amsterdam, fellow tech firm Panasonic has also gone while Dyson hoovered up the opportunity to relocate to Singapore. Marmite makers Unilever also took their leave – claiming it had nothing to do with Brexit.

But the reality is that the 8,000 firms employing more than 250 people account for around 0.1 per cent of businesses in the UK. That is dwarfed by the 5.6 million small and medium-sized enterprises in the country. But the bigger players (those with more than 250 staff) still make up 40 per cent of employment and almost half the UK’s turnover at 48 per cent.

So the survey gives little indication of how many workers would be affected by an exodus, especially as 2018 saw the first year-on-year fall in the number of businesses since 2000, down by 27,000 from 2017 levels.

But UK unemployment has reportedly fallen to just four per cent, according to the Office for National Statistics – although they later confirmed that included people employed for just one hour per week.

The number of those businesses with employees has also plummeted since the current series of government figures began in 2000. Now only a quarter of businesses employ someone other than the owner, highlighting the rise of self-employment.

It’s highly unlikely that the mobile hairdresser, the window cleaner or the builder will be leaving the country to set up abroad.

And that is before you take into account the tiny percentage of firms that trade with the EU – loudly quoted as six per cent during the Vote Leave campaigning, but somewhere between five and eight per cent of firms according to fact-checking organisation Full Fact.

The headline-grabbing survey illustrated a common fear for businesses post-Brexit – that the uncertainty brought by the lack of a deal is making it hard to prepare for the future. But the survey’s findings should be taken with a pinch of salt.

Read the full article in this week's Big Issue.

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