Brexit threatens Britain's EU-dependant SMEs
UK SMEs are struggling to export outside the EU according to a new report from commercial insurer RSA. This showed that while UK businesses want to expand into growth economies, they remain dependant on EU markets.
82% of the UK’s SMEs sees the EU as important to their future growth. More than half (56%) of SMEs complain that uncertainty around Brexit is already holding back their growth and 55% say that the government is not supportive in dealing with Brexit, with two thirds (66%) calling for greater clarity now on the UK’s future role in Europe.
While 85% of small business leaders believe SMEs are more globally-minded than ever before, the export potential of SMEs is bounded by the EU – with 72% of UK SMEs struggling to export beyond EU borders.
Tellingly, the study reveals a major disconnect between government-led initiatives to boost exporting – including plans to double exports to £1 trillion per year by 2020 and the recently – launched ‘Exporting is GREAT’ campaign – with four in five SMEs stating the government must do more to champion small exporters. Seven in ten (71%) SMEs call for the UK government to help relax controls in emerging markets to encourage free trade. Three quarters (74%) say less red tape on exports would help SMEs to grow internationally.
David Swigciski, SME Director at RSA, said: “The UK’s SMEs are stuck in the gravitational pull of the EU. Current government export support isn’t working for our smaller businesses, who are struggling to trade beyond Europe.
“Not only are our SMEs missing out on growth markets, they face significant risk from uncertainty over a possible Brexit and our future relationship with Europe.
“SMEs are telling us that the perception of the UK’s small businesses as corner shop owners is outdated and damaging. We need a 21st century framework for the 21st century SME. Government policy needs to be updated to support our internationally-minded business community if SMEs are not to be caught between the rock of the BRIC wall and the hard place of Brexit uncertainty in their core EU markets.”
For now, all SMEs can do is wait and see on Europe. However, they can start to take steps to identify further growth opportunities outside the EU and should be looking at peers and businesses that have already done this successfully.
More than half of FTSE 100 execs suffer pay cuts, freezes
Pay increases for many executives at the largest UK firms have been put on hold since the start of the pandemic with more than half of the FTSE 100 CEOs having had their salaries frozen in 2021, according to new research from PwC.
The research, based on PwC’s analysis of the first 50 FTSE 100 firms to publish their 2021 annual remuneration reports, reveals that 53% of CEOs and 52% of CFOs have had their pay reviews put on hold, compared to 35% and 30%, respectively, last year, pointing to the pandemic as the main reason.
According to Phillippa O’Connor, reward and employment leader at PwC, the current environment and impact of the pandemic has clearly led shareholders to sharpen their pencils when reviewing executive pay levels this year.
“It is clear from the pay outcomes we have seen to date in the FTSE 100 that companies have exercised restraint when it comes to both determining outcomes for the 2020 performance year and settling pay on a forward-looking basis for 2021,” says O’Conoor.
Bonuses, grants and pensions also affected
But that’s not all. Around a third (31%) of companies either waived, cancelled or reduced their 2020 annual bonuses, with the average payout dropping from just uhnder £1.1m to £843,000.
When it comes 2021 long-term incentive plan (LTIP) grants, these have also been revised in light of the economic impact of the pandemic with 45% of firms making some adjustment to their award, including retaining discretion to adjust outcomes at vesting in respect of windfall gains, reducing grant size, delaying the grant, and even canceling the award altogether.
The study shows that pension levels for incumbent CEOs remain at 15% of their salary, falling to 10% for new hires, bringing them in line with the wider workforce. Eight out of 10 FTSE 100 companies will have aligned incumbent pension levels with those for the wider workforce by the end of 2022.
O’Connor warns that moving forward into AGM season, there is likely to be added scrutiny around any pay rises that are greater than those for the wider workforce and on incentive outcomes that are “either not aligned with business performance or do not take into account the company’s approach towards matters such as diviends and government support”.
What announcements did UK's big firms make?
Back in April 2020, as the pandemic was just getting started, a number of UK companies, mainly insurance and banking stepped forward to review remuneration packages in response to the economic implications of the COVID-19 crisis.
British insurance giant Aviva announced that basic pay increases for its executive directors and the Aviva leadership team would be paused, while the executive directors of Prudential offered that their salaries be reduced and RSA confirmed its exec directors and executive committee would not be receiving cash bonuses for the current year.
The same was true in banking and finance with TSB announcing that its 10-strong executive committee would give up their bonuses in 2020, while Barclays said its chief executive, finance director and chairman would each give a third of their fixed pay for the next six months to charities. Lloyds cancelled its bonus payments and pay reviews in 2020
Other big UK firms including Ryanair, Taylor Wimpey and Rentokil all committed to reducing their executives pay packages.