Two thirds of the insolvency profession believe Brexit will increase the number of business failures in the UK over the next 12 months, according to a survey by Pinsent Masons.
The law firm conducted a survey of more than 400 insolvency practitioners to determine the attitudes towards restructuring and insolvency, with the impact of Brexit being at the heart of discussions.
It found 62 percent of the UK’s insolvency industry believes Brexit will lead to an increase in the number of business failures over the next year.
The survey also revealed that business confidence in the manufacturing and retail sectors has dropped.
Almost half of the survey participants agreed that these sectors combined are most likely to be hit the hardest over other sectors such as financial services, hospitality and leisure and infrastructure.
According to the survey, the real estate sector remains vulnerable as 17 percent of the participants believe it will also see an increase in business failure.
Nick Pike, a partner and member of the restructuring team at the firm, said a reported 18 companies in the retail sector have already gone into administration this year affecting more than 23,000 employees.
Nearly 70 percent of participants welcomed the government’s proposals outlined in the recent corporate insolvency framework consultation for a debtor-triggered moratorium.
This would mean creditors would not be able to take action against a company during the period it is preparing to restructure.
Pike 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.
“Insolvency experts are firmly in agreement that until those issues are resolved, businesses are likely to remain cautious about investment decisions.”