Some 35 per cent of small businesses say they would postpone major business decisions or innovations in the event of a no-deal Brexit outcome.
The finding forms part of the Federation of Small Businesses’ (FSB) new research into how businesses will prepare for a hard break from the European Union.
The FSB, the organisation which represents thousands of small businesses across the UK, said its study highlights disappointment in the UK Government and EU’s inability to secure a Brexit deal, adding that current negotiations risk “significant damage to the sector”.
With just 23 weeks to go, the research comes as the current stalemate is increasing uncertainty among the small business community as well as the likelihood of a no-deal Brexit.
The FSB said leaving the EU without a concrete deal in place would cost firms time and money while “forcing them to consider shelving business decisions, pausing investment and cutting staff”.
Its research found that one in four small businesses have already spent more than £2,000 planning for a no-deal scenario, while one in 10 have spent more than £5,000 and seven per cent have spent over £10,000.
Likewise, the survey found that over one in three (35 per cent) of small businesses say they would hold out on investment or innovation in the event of a no-deal, while one in five (21 per cent) say they would cut staff or expenditure.
Commenting on the report, FSB National Chairman Mike Cherry said the absence of a Brexit deal more than two years on from the EU referendum “brings us closer to a no-deal scenario that would be damaging and dangerous for our small firms”.
“Small business owners up and down the UK have woken up this morning with even less certainty about the climate that they will be trying to operate in the day after we leave the EU. This is an unacceptable situation,” he said.
“With 162 days left until Brexit day, the time for political games is over – we need the UK Government and EU to intensify negotiations to ensure that a pro-business deal focussed on trade, talent and transition is secured.”
He added: “The alternative is a no-deal Brexit that will be catastrophic for our small businesses.”