Sure. Before I dive into talking about the other business services sectors, I will give you a brief overview of our overall preparedness and the distinction between the UK overall and Scotland in that regard. I am quite happy to send all this information to the committee after the meeting.
We did a survey in September in which we looked at readiness. We asked our members whether they were prepared for Brexit and, if not, whether they would be prepared by the end of the year or whether it will not affect them. A higher share of members in Scotland said that they will not be affected by Brexit at all—the figure was 37 per cent while the UK average was a quarter. However, if we put that aside and look at the people who have preparation left to do, which is about two-thirds of our members in Scotland, a much higher share of them than the UK average said that they did not think that they would be ready by the end of the year.
I think that, to some degree, that reflects the make-up of our membership in Scotland, where there are many more small and medium-sized enterprises—with a heavy focus on the small—compared with the UK overall. In our statistics, we are finding in general that smaller companies are much less likely to feel that they can be ready or to feel that they can have all their questions answered at this point.
It is right to separate out financial services from the wider business services sector, not only because there is much more harmonised EU law and clearer consequences in the financial services sector, but also because, generally speaking, financial services often have higher margins, so they can sometimes absorb the impact better.
The fact that the wider services sector does not have clarity about information and the fact that the sectors within it operate so differently mean that it is much harder for those businesses to understand which European regulations are going to be relevant to them in relation to how they conduct their business after the transition period. It is much harder for them to find the information, which is, I think, why a much higher share of our membership in the wider services sector is saying what it is saying. The vast majority in financial services feel much more prepared. In the other business sectors, the share who feel prepared is much lower.
One reason for that is that free movement is and was the biggest single uniting issue about access to Europe for services sector businesses in general. That may be a less heightened issue at the moment simply because people cannot travel to access their clients anyway. That might mitigate some of the impact for services businesses at the end of the transition period, although that it is not necessarily a positive thing. Our members feel that they want to get back to regular business travel to access some of their clients in heavily regulated sectors where they cannot do that business at the moment.
The European Commission’s guidance on outbound trade very often gives a list of the European regulations, which can be very dense, and people have to read through them to understand how the application of a European regulation will differ in a non-transition world. Aside from questions about physical movement, the questions that we get from the non-financial business services sectors tend to be about how VAT will be accounted for in the future and what the direct and indirect tax implications will be.
In business services, we have a lot more people saying, “We don’t know what it is that we need to know in order to prepare,” and that is amplified by the fact that, particularly for non-financial services, planning will default back to a country-by-country approach once we are a third country outside the single market. There will be a lot less uniformity across Europe for people in the non-financial services sectors to rely on in planning. They will have to go back to understanding the arrangements in Italy, in Germany and so on, because there are sometimes differences.
The difference between being in the single market and not being in it is about that floor or baseline. People in the sector will have to go back to looking at the differences between regulatory arrangements in determining their ability to access and service clients after the transition. That might not be relevant immediately because there is so little business travel at the moment, although there are exemptions. However, the delivery of conferences, for example, will be different. Some things like that are being delivered online, but, if someone is to physically go to deliver a conference lecture, the legal basis for their ability to tender for that service will be completely different once we are outside the single market, and the tax arrangements for how they account for that will also be different.
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There is a lot more uncertainty in non-financial business sectors about exactly what the impact will be. That is why a much higher share of financial services respondents said, “No, we do not think that we will be prepared by the end of the year” or “No, we do not have the answers to all our questions.” That will continue to be the case unless some details come out of the agreement, particularly around the mutual recognition of professional qualifications, which Stephen Phillips alluded to. There is a lot of waiting and trying to understand what that will mean for non-financial services after the transition period.