Calculating the Brexit Effect
Corporate insolvencies, the High Street in crisis, a rash of profit warnings and a protracted lack of investment in the manufacturing sector are combining to create concern amongst many agencies that Brexit could impact the UK economy more than has been previously estimated.
A recent survey from the CBI suggested that the possibility of leaving the EU customs union and single market without a deal has already led to deep cut backs in investment with many industrial bosses planning to reduce spending on new machinery and IT equipment over the next year.
Simultaneously, the number of companies entering into a formal insolvency process since July has risen by 35% compared to the previous quarter. KPMG has reported that the Construction sector has been the worst affected, ranking it slightly ahead of Retail as the source of most corporate insolvencies in 2019. The contributing factors, all relatable to Brexit, have included restricted access to finance, rising costs and project delays caused by political and economic uncertainty.
Administrations in Construction also jumped up from 49 in the second quarter to 76 in the third quarter of this year. Large regional contractors such as Marcus Worthington and Dribuild also were also victims, whilst the Whitbread hotel group, Travis Perkins and the Pendragon car dealership group also unveiled profit figures strongly affected by their customers’ concerns over Brexit.
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