Brexit uncertainty puts more UK businesses into significant distress

    Grimsby-based Forbes Burton, a company rescue and
    insolvency specialist has warned that ongoing uncertainty over Brexit means
    more companies could be facing financial difficulties in the months to come.

    This warning has come as
    new figures from risk management specialists Red Flag Alert and The Insolvency
    Service have been revealed, showing that almost 1 in 5 UK businesses are
    classified as being in ‘significant distress’.

    Rick Smith, Managing
    Director at Forbes Burton says: “This is a real concern and should be taken
    seriously. For example, in the Yorkshire and Humber area, companies with
    Critical Problems (companies with County Court Judgements totalling £5,000 or
    more) rose from 130 Q1 2018 to 172 Q1 2019 and in the East of England, which
    includes Lincolnshire, the figures were up from 155 to 168 over the same

    “The impact of the
    uncertainty around Brexit is really starting to take hold now and we may see
    even more increases in the number of businesses facing problems in the future.”

    The construction industry,
    usually used as a ‘bellweather’ for the UK economy showed a 9% increase in
    businesses in financial difficulty. The East of England specifically showed a
    6% increase from the from Q4 2018 to Q1 2019.

    Rick added: “The hotels and
    leisure industry have also been hit hard by Brexit uncertainty. The reduced
    labour supply as the number of foreign workers falls and the cost of a 5%
    increase in the national living wage has pushed 9% more hotel businesses into
    financial distress as last year.”

    Rick explains that the lack
    of business travel could have had the biggest impact on hotel profits, as
    businesses cut back on travel in light of the uncertainty over whether or not
    the UK can scramble together a Brexit deal.

    Premier Inn owner Whitbread
    also recently
    reported a 40% decrease in annual sales since the Brexit referendum and
    blames lack of business travel as a major factor.

    Rick continued: “Many
    businesses have been preparing for a no-deal Brexit for a while now, but if you
    haven’t, now is certainly the time.

    “A no-deal Brexit has the
    potential to seriously disrupt business in the UK for an extended period. Every
    business should be ensuring that it has good cash flow and that all financial
    accounts are up to date. Should the country hit a period of even more economic
    uncertainty, it is essential that you know how healthy your business is and how
    well you can weather out the Brexit storm.”

    “It’s also a good idea to
    check on your suppliers. I would always recommend you keep your options open.
    If your most trusted clients start to feel the pressure, ensure you can fall
    back to another more stable supplier. It’ll help keep your business strong and
    prepared for the future.”

    It isn’t too late for
    businesses in the UK to find themselves back out of financial distress, as Rick
    explains: “The UK economy is generally in good shape and we are seeing a record
    number of people in employment. Hopefully, the government will be able to
    provide greater certainty around Brexit over the next couple of months which
    should increase confidence.”

    To find out more about
    Forbes Burton, visit www.forbesburton.com