Around half of small firms say Brexit will change their trading habits, but they're not sure how, according to money transfer platform TransferWise.
Numerous small firms rely on international income, but Brexit uncertainty is leaving them in a trade limbo.
Over a quarter receive more than £100,000 a year in international turnover. With nearly 99 per cent of the UK's 5.5m businesses being small and medium-sized firms, with an average turnover of £327,000, for many international trade could equate to a third of their annual income.
Over half of Britain's small firms send or receive foreign currency payments as part of regular business activities, and are often left confused at the overall cost of foreign transactions. Exchange rate mark-ups on international payments charged to small and medium businesses came to £4.1bn in total for the previous year, according to research by Capital Economics.
Taavet Hinrikus, TransferWise's chief executive, said: "UK SMEs have embraced the international marketplace, and many are raking in a significant portion of their income from overseas custom. The uncertainty about what Brexit means for imports and exports could be hugely damaging for these companies, and it's time the government took action to help."
Hinrikus said the government's opportunity is in the Second Payment Services Directive (PSD2) which mandates transparency in the aforementioned transactions. The draft regulations have recently been released for consultation.
"Back in 2015 the government pledged to bring transparency to the foreign currency industry. PSD2 was the perfect opportunity for the government to do something for small businesses, given the directive states that people should know ‘the real costs and charges’ of transferring money abroad," he added. "And yet the UK government has chosen to leave this out of the draft regulations – bowing to pressure from the banks and effectively putting two fingers up at UK businesses."
"There is time to change the final regulations, but the government must act now. It won’t alleviate Brexit uncertainty, but it will mean a fairer deal for all those British businesses who trade internationally," Hinrikus said.