Brexit will lead to corporate insolvencies rise: R3 study

An overwhelming majority of industry experts believe the UK’s decision to leave the EU will lead to a rise in corporate insolvencies over the next year, according to a new study by R3.

A survey of insolvency and restructuring firms also shows that 55 per cent believe their finances “have been hurt” since last June. Insolvency practitioners across the UK are most concerned about the hard Brexit option being implemented, with 76 per cent believing it will lead to a rise in corporate insolvencies.

A soft Brexit option is considered to be less risky for both businesses and individuals, with just 1 per cent of those surveyed believing this approach would lead to a significant increase in corporate insolvencies.

A total of 39 per cent of practitioners think a soft Brexit would have no impact on corporate insolvency numbers, but fewer than 8 per cent think a hard Brexit will have no impact.

Andy Haslam, North East vice chairman of insolvency trade body R3, said: “Even in the light of the Prime Minister’s speech, the uncertainty around what final form Brexit will actually take makes it difficult for businesses to plan ahead and assess what risks and opportunities they have. “A continued rise in insolvency numbers, however, is not inevitable. Recent years have seen the insolvency and restructuring profession focus increasingly on rescuing business outside of formal insolvency procedures.

“This approach may help keep post-Brexit insolvency numbers down but a lot will also depend on how the economy performs after the split with Europe.”