Insolvencies fall this quarter but Brexit may lead to business failures next year
Businesses remain concerned about the upcoming changes with Brexit, but insolvency numbers have fallen during this third quarter
BUSINESSES remain concerned about the upcoming changes with Brexit, but insolvency numbers have fallen during this third quarter.
According to a survey from Pinsent Masons, 62% of the UK insolvency industry believe that Brexit will lead to an increase in business failures over the next year. However, new analysis from KPMG has showed that despite economic turbulence in the wake of the EU referendum, the number of companies entering formal insolvency across England and Wales has continued to fall during the third quarter of 2016.
Over 400 insolvency practitioners who attended Europe’s largest restructuring and insolvency conference held by Pinsent Masons this week took part in a survey with Brexit at the heart of discussions. Almost half of all survey participants agreed that the manufacturing (22%) and retail (22%) sectors and the real estate sector (17%) are most likely to be hit the hardest.
Nick Pike, a partner in the restructuring team, Pinsent Masons, said: “Very little is clear about the terms on which the UK will leave the EU and so businesses are in a period of great uncertainty. Until those issues are resolved, businesses are likely to remain cautious.”
The survey asked participants whether they broadly welcome the government’s proposals outlined in the recent Corporate Insolvency Framework Consultation for a debtor-triggered moratorium, the result was 69%.
“These results show that insolvency practitioners are largely on the same page and would welcome measures to provide a stronger framework to rescue viable businesses”, added Pike.
The numbers from KPMG, taken from notices in the London Gazette, indicated that there were 277 corporate insolvency appointments in the three months to 30th September 2016, down from 299 in Q2 and 300 in Q1.
Blair Nimmo, KPMG’s UK head of restructuring, said: “The predicted post-referendum spike in insolvencies hasn’t materialised, as companies refused to panic, but instead adopted a ‘wait and see’ attitude. Many sought to keep up those good habits and a close grip on cash and cost. Overall confidence in the economy is high, and our recent CEO survey findings reveal business leaders are largely positive.”
Despite the initial impact that the result of the referendum had on the UK economy, businesses, investors and lenders alike have broadly taken a pragmatic and measured approach to Brexit.
Nimmo, concluded: “With the Prime Minister having now set out a timetable for Brexit, many companies are bracing themselves for further economic volatility and uncertainty as negotiations kick off. In order to continue to grow in a post-Brexit environment, companies must ensure they plan appropriately to adapt to any changes in market conditions.”