Dana Fox credits customers in Britain with much of his software company's growth over the past nine years. And if Britain votes to leave the European Union later this month, he's worried he'll have to navigate legal and language hurdles to make new connections in Europe.
"Right now if somebody asks who I have over in Europe, I say I've got somebody in the U.K." says Mr. Fox, director of global business development with Waterloo-based Athena Software, which sells case-management tools for health and social services. "If the U.K. leaves, then I have to go into each one of those countries with a language and business rules I don't understand."
Recent polls show increasing support for Vote Leave, but many observers say the results are too close to call. If Britons do vote to leave the EU in the June 23 plebiscite, companies with offices in Britain might have to think about relocating to an EU country, said Randall Hansen, director of the Centre for European, Russian and Eurasian studies at the University of Toronto's Munk School of Global Affairs."They would have to leave and go to Dublin or Paris or Germany."
Canadian companies like Athena choose to do business in Britain because it's a "beachhead" to launch into the EU, but still shares a language and similar laws with Canada, Mr. Fox said. Small businesses often don't have legal departments to navigate the rules – and the language – in other EU countries, he added.
"There's a lot of stuff we take for granted and assume everybody does it this way – but no, they don't," said Mr. Fox, who said his company has grown from eight to 54 employees since 2007, when they started doing business with a key client in the U.K. "Many of the [EU] countries are offering incentives to set up a research centre or an accelerator centre and there are tax breaks for a while – but at the end of the day there is a cost that you're going to have to pay to get set up."
Companies also fear Brexit could damage the local economy and dry up business. Charlie Shaw is director of Esteiro Business Solutions, a software company based in Britain with an office in Toronto. "An exit is likely to affect our business directly," he said. "Canadian to U.K. business is likely to reduce not just because it will no longer be a European gateway, but also because all the signs are that the U.K. economy itself will suffer significantly as a result of an exit."
While some in the Leave camp have said that worries about economic effects have been exaggerated, the U.K. economy is "going to take a real hit in the short and perhaps the medium term," Mr. Hansen said.
"Businesses hate instability so there will be an economic effect. It's not going to turn Britain into a poorhouse but it will hurt the economy," Mr. Hansen said. "Demand is going to fall and that is going to have a direct effect on any small business doing trade with Britain – the question is: How long it will last?"
A Leave vote will mean Canada will have to negotiate new trade deals with Britain. Plus, recently, the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union been facing protests in Germany. If Britain votes to leave the EU, that could further delay CETA.
All that uncertainty is bad for business, Mr. Hansen said. "There might be less favourable trade relationships. If a free-trade deal is negotiated, many Canadian producers who compete with British producers will lobby for protection."
However, not all Canadian companies doing business with Britain are stressed about the possibility of Brexit. Andreas Duss, partner and chief creative officer at Toronto-based Nourish Food Marketing, says Brexit would have "minimal" effects on Canadian businesses. "We know there will be no changes for two years and then I believe the U.K. will look at traditionally friendly nations like Canada, New Zealand and Australia to build immediate trade relations," Mr. Duss said. "And the rest of Europe will carry on as it always has."
He doesn't think that Britain will suddenly impose protectionist policies that could hurt Canadian small businesses trying to sell there.
"The traditional and prevailing political outlook in the U.K. has been pro free trade – we don't expect that to change," Mr. Duss said.