A Rising Tide

In the grind of Brexit, we risk losing sight of the fact that the UK is one of the best places in the world to start and grow a business. According to the World Bank's Ease of Doing Business index we're ninth, but this doesn't really do us justice. Outside a few cities in the US, you would be hard-pressed to convince me there is anywhere better to be an entrepreneur than the UK (though, arguably, opportunities aren't evenly distributed well enough across our major cities.)

Just consider the way we incentivise employees. More than 30 business leaders and entrepreneurs have signed a letter to be delivered to European policymakers early next year, urging them to consider updating EU laws on giving employees shares in the startups they work for.

As the letter states: "universally, stock options reward employees for taking the risk of joining a young, unproven business, and give them a real stake in their company's future success." Currently, European employees own around 10 per cent of the firms they work for, compared to 20 per cent in the US.

The letter – signed by the leaders of top businesses like TransferWise, Funding Circle and Klarna – wants EU policymakers to adopt a similar structure to that of the UK, and ditch "patchy, inconsistent and often punitive rules that govern employee ownership".

This doesn't mean the UK shouldn't strive to be event better. Earlier this year, the UK's popular and successful Enterprise Management Incentive (EMI) share option scheme, was interrupted by the temporary failure of the government to secure an extension of an existing exemption from the EU State Aid rules.

Sanity prevailed, but EMI is starting to show its age, and is probably approaching the point where a review of its operation is required. "The EMI tax reliefs come with a plethora of granular conditions. The rules on independence, the rules that prevent companies with EMI schemes participating in some joint ventures, constraints on making changes to the Articles of EMI companies, working time and employee number requirements, and changes in the mix of the activities of companies with qualifying and non-qualifying trades are just a few of the rules that companies can trip over during the lengthy lifetime of an EMI scheme."

But, ultimately, it's worth remembering that the UK is still one of the best places in the world to be an employee in a fast-growing firm. Whatever happens with Brexit, let's hope our policy influence in Europe doesn't diminish, as we should want European countries to continue to follow where we lead. A rising tide of entrepreneurship lifts all countries.

Policy Updates
Following the Finance Bill scrapping through, this month's Policy Update focused on The Budget. Our Policy Updates are pithy explanations of how Government policy impacts entrepreneurs, as part of our aim to be the bridge between entrepreneurs and policy makers. This month, Research Director Sam Dumitriu explains everything from the (temporary) tax cut for the High Street, the string attached to Entrepreneurs’ Relief and new resources for improving Management Capability in business owners. In the coming months, we'll explain in plain language how the Brexit deal will impact entrepreneurship, as well as deeper dives into how entrepreneurs can benefit from other policies, like R&D Tax Credits, Innovate UK funding and Entrepreneurs' Relief. (Find out how you can join here).

Half full of it
I also asked a few Members what they thought about May's Brexit deal for a Forbes article. As you would expect from people who spend their lives thinking differently for a living, there are some opposing views – but they are united in their optimism for British entrepreneurship.

We also pass on press opportunities and speaking engagements to Members. For example, on Saturday 8th December, EenVandaag, a current affairs programme broadcast on the Dutch public television network NPO, will be in town filming a story on Brexit. They already have the pro-Brexit angle sorted, but are looking to speak with a small business owner who voted to Remain. Just let me know if you want to pass on your details (and that of your business) to the producer.

Read the whole e-bulletin here, and sign up here.