Professional services sentiment improves as 'Brexit means work'
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
IMPROVEMENTS in ‘significant’ levels of financial distress were found in professional services post-EU Referendum, according to research from Begbies Traynor.
UK businesses across nearly every sector of the economy have been showing signs of stability with levels of ‘significant’ financial distress falling by 6% over the past three months.
But professional services firms had the second highest improvement during Q3 2016, falling by 10% to 11,745 companies (Q2 2016: 13,031 companies). This improvement was due to an influx of new projects from clients looking for help in navigating the current Brexit uncertainty and the potential legislative changes.
Julie Palmer, partner at Begbies Traynor, said: “Professional services firms have been in high demand following the referendum result, contributing to lower financial distress. However, challenges remain in the long term as any negative impact following a Brexit deal could dampen future activity.”
The Red Flag Alert research for Q3 2016, carried out by Begbies Traynor, monitored the financial health of UK companies for three months after the EU Referendum. The research revealed that 263,517 struggling businesses in Q2 2016 was down to 248,916 companies in Q3 2016 and 92% of the total were SMEs.
Overall, the UK economy appears to be in a stronger position, said Ric Traynor, executive chairman at Begbies Traynor “While we wait to see whether the government opts for a ‘hard’ or ‘soft’ Brexit strategy, businesses at least appear to be better placed. The stronger the UK economy is pre-Brexit, the better it will handle post-Brexit,” he added.
Construction sector saw the number of companies experiencing distress fall by 11%, the highest improvement. UK businesses suffering ‘significant’ financial distress fell 2% across the economy as a whole. This new data chimes with recent ONS data which reported that Brexit has had no major effect on the UK economy thus far.
Julie Palmer concluded: “UK construction firms appear to be bouncing back after the initial Brexit shock, and in July construction activity shrank at its fastest since 2009. All eyes now turn to the upcoming Autumn Statement.”