More than a quarter (27%) of small UK companies would be "genuinely deterred" from trading with the EU should any tariff be introduced after Brexit, research released by the Federation of Small Businesses (FSB) on Tuesday 21 March shows.
The study also found that a majority of the firms (63%) would reject the so called "hard Brexit" scenario and ideally maintain full access to the bloc's 500 million people-strong single-market.
"The impact of potential tariffs and non-tariff barriers to trade with the EU is shown to be a real concern for small businesses trading overseas, at the very time that the UK economy can least afford to see a slowdown in exports," said Mike Cherry, the national chairman of the FSB.
"The FSB calls on the government to secure the easiest and least costly access to the EU single market in the Brexit negotiations.
"This includes a new customs arrangement with the EU that allows for frictionless cross-border trade.
"And we call for greater support for small businesses to gain full benefits from future trade deals with non-EU markets. A small business chapter to cater to our member's specific needs in all future trade deals is crucial."
The research also revealed the importance of other markets for small businesses in Britain, with nearly half (49%) of FSB members selecting the US as a priority market and one in three (29%) choosing Australia. Other key markets include China (28%) and Canada (23%).
Labour MP Phil Wilson MP, supporter of the Open Britain campaign group, said: "When over a quarter of firms would be deterred from selling to Europe by the imposition of tariffs, it is clear that a deal with the EU that does not deliver the 'exact same benefits' David Davis promised would hammer businesses and put jobs at risk.
"Small businesses overwhelmingly see Europe as our most important trading partner, which should focus ministers' minds on getting a good trade deal with Europe rather than threatening to walk away without a deal."
Theresa May's 12-point Brexit plan
- Government will provide certainty and clarity to politicians and businesses
- UK will 'control our own laws' by quitting the European Court of Justice
- Strengthen the 'precious union' between England, Wales, Northern Ireland and Scotland
- There will be no 'hard border' between Northern Ireland and the Republic of Ireland
- UK will 'control' EU immigration, while recruiting the 'brightest and the best' from around the world
- Government will seek a reciprocal residency rights deal for EU and UK workers "as soon as possible"
- To protect workers' rights
- Ministers will seek a 'bold' and 'comprehensive' free trade agreement with the EU
- UK will seek a customs agreement so that it can broker its own trade deals with non-EU nations
- Maintain European science and innovation ties in bid to keep the UK a 'world leader'
- UK will continue to work with the EU to combat the threat of terrorism
- Ministers will seek to avoid a 'cliff edge' and seek a smooth split from the EU
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