What impact would Brexit have on insolvency cases?

The main impact of Brexit is the uncertainty that is following from the lack of clarity on what Brexit will look like. This has an impact on both consumers and businesses by making them more cautious and therefore holding back on big expenditure decisions whilst getting more clarity. This follows though in terms of falling expenditure in the economy which in turn means that companies turnover or sales are starting to fall and if they don’t reduce the cost base then profit levels will also fall and may well turn to loss. If the losses aren’t dealt with quickly enough then it may well lead to additional insolvencies occurring.

Another impact of Brexit is the fall in strength of the pound against other world currencies which forced up import prices which has squeezed margins and made business less profitable.

Further down the line another impact will be that UK companies sell components to other European manufacturers for a bigger product. The bigger products need to have at least 50% of their components manufactured within the EU to be classified as EU origin products and therefore easier to sell across boarders without impacts on tariffs. Once the UK goes outside the EU they will be more reluctant to source from the UK because it will increase the percentage of their products that are not manufactured within the EU and could cause problems for themselves.

For more information, fill in our online contact form.