More than two thirds of insolvency professionals believe a “hard Brexit” would lead to more corporate insolvencies, according to insolvency trade body R3.
Just before Theresa May’s Brexit speech confirmed that the UK will leave the European single market, the trade body for insolvency professionals published its survey of nearly 400 professionals from the insolvency profession, which forecasted the effects of Britain leaving Europe.
More than a third of respondents, 35 percent, said a “hard Brexit” would lead to a significant increase in corporate insolvencies.
Less than 10 percent of the respondents said they thought it would have no impact on insolvency numbers.
Andrew Tate, president of R3, said: “Insolvency practitioners are on the frontline when it comes to supporting struggling businesses.”
Insolvency professionals told R3 they have noticed an increase in the number of troubled businesses referencing Brexit when seeking advice since the result of the referendum was announced.
Tate added: “The uncertainty around what final form Brexit will take makes it difficult for businesses to plan ahead and assess what risks and opportunities they have.”
R3 also said that insolvency professionals are worried that Brexit could make it harder to retrieve money from cases in Europe.
It added: “UK insolvency practitioners currently benefit from the European Insolvency Regulation which provides for the automatic recognition of their powers across the EU.”
Trade body members believe Brexit could hurt the profession’s ability to combat fraud and resolve cases quickly in Europe.
In her speech the Prime Minister confirmed that Britain’s exit from the EU, meant exiting the single market.
She said that trying to retain membership of the single market post-Brexit would mean a continuation of being subject to European regulations, with no vote on what those regulations are.
She added: “It would mean not leaving the EU.”
Instead, May said the UK will attempt to seek the “greatest possible access to the single market”, on a “fully reciprocal basis.”
She also confirmed that Britain will not retain full membership of the European customs union.
After negotiations with EU member states, May said a final deal between the UK and the EU will be put to a vote in the House of Commons and House of Lords, before it comes into force.
The Prime Minister also talked about a desire for phased implementation, after Britain exits the EU, of new arrangements such as the legal and regulatory framework for the financial services sector, and the criminal justice system.
She said the government will seek to avoid “a cliff edge” for businesses and “political purgatory” after Brexit, and will instead strive for a phased transition.