Noora Virtanen, Graduate Coordinator of the Centre for European Studies (CEFEUS) at Canterbury Christ Church University, reflects on the fall of Southern Salads and explains how findings from the latest CEFEUS report can help to mitigate the economic impact of Brexit on Kent.

The BBC reported yesterday that Southern Salad, based in Tonbridge, would be making more than 250 people redundant following the pound’s devaluation since the EU Referendum. According to the company’s administrators, the business had become unsustainable as “the sudden decline in sterling was not foreseen by the company”, which eventually placed a severe strain on their cash-flow.

The recent report ‘Kent and Medway: Making a Success of Brexit: A Sectoral Appraisal of SMEs and the Rural Economy’ produced by the Centre for European Studies (CEFEUS), one of three reports published so far, indicated similar concerns for these sectors. While overall business confidence improved since late 2016, small businesses face challenges on both domestically and in terms of the future relationship with the European Union – for instance, 64.5% of businesses in the UK have seen an increase in operating costs stemming from fuel costs, the weaker pound and inflationary pressures.

On a regional level, the Kent Invicta Chamber of Commerce found that one in four businesses reported an increase in their cash-flow over the last 3 quarters whereas 29% reported a fall. These numbers indicate the possibility that businesses have not been successful in recovering the increased costs of their inputs stemming from the devaluation of the pound. The case of Southern Salads is an example of this type of situation.

The findings of the CEFEUS report indicate that the most beneficial option for SMEs and the rural sector in Kent would be a soft, slow, “economy-first Brexit” – yet this is only possible if clear signals are given by government, and viable support provided by government and business alike.

It must be noted that contrary to many other voices in the debate about Brexit, this finding is not motivated by any political agenda. The CEFEUS report emerged through collaboration with a wide variety of stakeholders and from regional data gathering in Kent and Medway. Thus, it presents an inclusive, objective and balanced analysis of national and regional dynamics. It recognises different opinions and embeds them in an expert analysis of the terms of trade with the EU and non-EU states, rules, standards, regulations, and labour and funding.

To prevent situations such as the collapse of Southern Salads, they must be tackled proactively. Thereby, having regional information on key sectors as presented by the CEFEUS reports is crucial to ensure that local businesses can turn Brexit into a success. The reports provide, in addition to key ‘asks’ for the national and local government, suggestions for business-to-business support. Furthermore, engaging with local voices allows for developing targeted solutions to the problems faced. Most prominently, the recent CEFEUS report suggests, based on the ‘asks’, exploring “the notion of a Brexit Compliance Officer who can help your business be ready for change and ready to grasp opportunities. Experience of the 2008 financial crash showed the value of planning ahead”. These kinds of activities can well help local businesses to adjust to the rapidly changing business environment in the UK and make a success of Brexit.

The CEFEUS reports can be found here.