We need to end this uncertainty surrounding Brexit as quickly as possible, stop the short term profiteering and negotiate a deal that suits the UK and our former formal, but still to be, trade partners.
Brexit Impact on UK Businesses and Insolvencies

Well after all the hype and speculation, we’re still no nearer actually knowing what our withdrawal from the European Union will mean for us on the northern side of the channel. What is very clear, is that the referendum certainly divided the country. Should we be surprised by that – not really, because any referendum by its very nature will usually always be a close vote. A Government will only go to the people where there are some doubts about what the majority really want. That said, it seems quite obvious now that David Cameron really thought the result was in no doubt!

We’ve had the vote – it was a very simple decision – stay in or leave – the people cast their votes accordingly – if we are to have any credibility as a democratic nation we must respect the outcome and negotiate the very best terms possible for this great nation of ours.

It is probably fair to say, that there was an awful lot of political posturing and less than truthful statements by both sides in the lead up to the vote. What do you expect from politicians – the whole truth – never in a million years!!

Our Trading Relationship with Europe – Moving Forward

Looking forward there are so many factors that now come into play in deciding on exactly what our trading relationship will be with our soon to be former partners. A number of those factors are completely outside of our control. There are various elections in Europe this year, particularly in some countries that are perhaps looking at what we in the UK have done, and are possibly slightly envious that we will soon, no longer have to implement European legislation that perhaps doesn’t fit too well with our historical culture. The French and the Dutch are fairly patriotic – if they decide that Brussels has gone too far in trying to control the cultural side of things, then we may see similar movements to UKIP gain momentum in those countries.

The basic premise of a collection of European nations trading together is still a brilliant concept – did it though move away from that with the creation of the European Parliament which in turn seemed to be more focused on trying to standardise the way of life for 300 million people with vastly different historical cultures? Just an observation!

If the EU accept that the vote was not a two fingered vote to our fellow Europeans but possibly a vote saying that we were not happy with being controlled centrally from gravy train politicians in Brussels, then all should be well. However, there are some pretty powerful gravy train politicians in Brussels who may see this as an opportunity to try and punish us for daring to question their inflated opinion of their worth to European society.

Making Brexit Work for the UK

As a nation we need to stand together and work together to make our exit work for the United Kingdom. We have a remarkably skilled workforce across a very diverse industry base. Our products and services will still be in demand from our European neighbours, as will indeed be the goods and services that they look to sell into the UK. Why should anything change? Any sensible person would see that if we start imposing tariffs on each other, then the only ones to lose out will be everyone in Europe!! Again the problem is that we have career politicians, more so in Brussels, with their snouts in the trough looking to protect their own inflated salaries and benefits. Amazing how many left wing politicians from many countries, suddenly like earning £500k plus from being an MEP!!

Brexit Should, In Theory Boost the UK Economy

Brexit should in theory give a boost to our economy, so long as we can negotiate trade deals without penalty. Why – because if our Government can then repeal the many hundreds of bureaucratic and wasteful laws passed by Brussels that do nothing but add cost to doing business, then we should have a competitive edge over our European neighbours, because they will still be subject to such legislation. That though is probably one of the reasons why Brussels will try and make it difficult for us. They are also terrified of other countries looking to leave – the less contributing to the central pot – the less the take for them!

Maybe I’m a tad too cynical of those gravy train politicians in Europe, but as a businessman I tend to support the view, that it’s my business, I’m responsible for its growth, wellbeing etc. – I have to drive the business if I want success. Politicians tend to miss that point – let everyone else contribute and we’ll take a slice!

I think the proof of the pudding in terms of the style of politician to govern will be demonstrated not here in Europe but across the pond in America. Trump – he comes with a ton of issues and past history – but he’s not a politician – he’s a businessman. He’s not that well liked in America, but he says it like it is – if he gets the job done and puts America back on the map – then that’s what he was elected to do -heaven help the rest of us though!! The point really is, that politicians really do not really understand business. Without successful businesses employing people and contributing to the Exchequer, the country’s bust!! We need Theresa and her team to be strong and to do for the UK what Donald is doing for America – just leave all the racist, sexist and other bad stuff behind!

My predictions:

  • Currency traders will continue to exploit the uncertainty until the final deals are signed, causing the pound to be unfairly downgraded.
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  • Banks and other lending institutions will probably delay any significant investment opportunities, again until we know the final outcome of any trade deals.
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  • Foreign ownership of UK property, especially in London will continue at a pace, given the benefit of a depressed pound.
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  • There may well be a short term increase in the number of companies facing financial problems, given that banks do not like lending where there is uncertainty.
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  • Once the trade deals are signed, which they will be, Brexit will be over, done, finished and we can get on once again with building a strong economy.

 

Brexit Uncertainty and Company Insolvencies

What is becoming clearer is that there are companies out there already looking to profit from the uncertainty of Brexit. Prices for consumer goods have risen in the UK by more than 3% recently. This is not good news, especially when wages and salaries are generally rising by a much lower amount. If this continues, then we could see consumer demand fall quite significantly as the population tightens its purse strings. That would undoubtedly lead to more companies facing uncertainty about the immediate future, which in turn could lead to a decrease in investment, resulting in an increased number of insolvencies.

Clearly we need to end this uncertainty as quickly as possible, stop the short term profiteering and negotiate deal that suits the UK and our former formal, but still to be, trade partners.

 

Author: Richard Saville

Richard has helped hundreds of businesses through difficult financial times and has an extremely broad knowledge across most industries. If you are a company director who is worried about the impact that Brexit may have on your business, please contact us for help and advice.