Written by: Keith Tully
Reviewed: Thursday 12th October, 2017
The impact of Brexit and the process of Britain departing from the European Union is likely to push up rates of insolvency among businesses throughout the UK.
That’s according to a majority of respondents to a survey of insolvency and business recovery professionals carried out recently by the Institute of Chartered Accountants in England and Wales (ICAEW).
As many as 73 per cent of the insolvency and recovery experts polled cited the impact of Brexit as the foremost threat to the solvency of UK companies over the course of the next few years.
Other issues that experts say could present a challenge to companies across the country in the next 24 months include interest rate rises, the attitudes of HMRC and problems with creditors.
Current expectations are that the retail sector could be the worst hit when it comes to corporate insolvencies in the coming months as the Brexit process unfolds and the Bank of England potentially raises its base rate of interest.
“We are in no doubt that businesses in the UK face difficult times ahead,” said Bob Pinder, a regional director with the ICAEW.
“A sharp and unexpected rise in the cost of doing business can make managing liquidity tough.
“We believe that a change in attitudes is critical in order to successfully avoid substantially increased corporate insolvencies – confronting business issues, rather than being ashamed of them.”
Mr Pinder’s advice to any company concerned about their ability to remain solvent in the coming months is to seek early help from business restructuring experts and insolvency practitioners where relevant and required.
Prime minister Theresa May triggered ‘Article 50’ in late March this year and effectively declared the UK’s intention to depart the EU in two years.
The latest figures from the research firm Capital Economics suggest that confidence about the UK economy was lower among small British businesses in September 2017 than was the case 12 months before, with prolonged uncertainty surrounding Brexit considered a key contributor to that slump.
Only 12 per cent of small business respondents indicated that they felt Brexit would have a positive impact on their revenues, while 39 per cent said its impact would be negative from a revenue perspective.