There we were settling into a particular form of Brexit when the tumultuous effects of the General Election were felt and the wise voices now tell us that we will have to expect a somewhat different form of Brexit. In short, there will be an open-ended period of uncertainty both political and by extension economic.
The uncertainties do not give any comfort to the business community who are already vexed by the slipping pound, an inflationary squeeze and the prospect of interest rate rises. To add to this, political parties of all colours have either not ruled out or actively promoted, dependent on your view, tax rises. The hyperbole of rolling news certainly adds to the drama with constant reminders.
To put a little meat on the bones, figures suggest whilst manufacturing is slightly up after a quarter of decline, construction output fell with housebuilding down by 7.1% on the month according to experts. Just a few short weeks, which seem like an age ago, it was suggested that the nation needed to be building 250,000 homes a year. There is also evidence that house prices have stagnated. Figures reported by The Halifax state that prices were down 0.2% quarter on quarter whilst a year ago pre-referendum prices were rising by 9.6%, and the current year on year change is now down to 3.3%. Property professionals suggest that the market could remain subdued. Whilst the London market is particularly affected by Brexit uncertainties, there is additional evidence to suggest that there are declining number of both sellers and buyers.
Consumer confidence can also be gauged by new car sales. From a peak in 2016, numbers fell by 8.5% year on year in May with reports that sales are flat and that this trend is likely to continue as customers consider the likely impact of rising inflation.
The UK’s insolvency restructuring regimes are recognised as world leading. What is clear is that businesses going forward will have to be on their metal in what are undoubtedly going to be challenging times. Certainly, anyone with any concerns about the future would be well advised to engage with a regulated and recognised professional.
In the broader restructuring and insolvency context R3, (the trade body representing restructuring and insolvency professionals) have stated that they would prefer a form of Brexit that would protect cross-border insolvency and asset recovery issues currently afforded by the EU. This would maintain the status of the UK as a world leader in restructuring and insolvency and allow for the new Government to move ahead speedily with proposed reforms to the corporate insolvency framework.
The hung parliament will lead to legislative compromises. Issues which are not voter-friendly are likely to be kicked down the road. Nevertheless, we anticipate that our representative body will continue to press on with its promotion of the economic and social value of our profession and its legislative priorities.
The insolvency profession encourages the Government to work closely with it to ensure that businesses with financial difficulty seek advice as early as possible. It continues to be actively engaged with agencies such as HMRC and the Pensions Regulator to assist and enhance recovery and restructuring.
At Poppleton & Appleby, we have four Practitioners licensed by the Insolvency Practitioners Association; long-standing members of R3, they are also backed up by a highly skilled and experienced team of colleagues working together from our offices in Manchester and Huddersfield. As ever, Directors and stakeholders whose businesses are experiencing financial challenges and are concerned over the apparent uncertainties are encouraged to seek early advice. Prompt advice drawing on all the options available, from the introduction of refinancing and other restructuring tools through to potential implementation of processes within an insolvency and restructuring framework can assist in creating an environment for the best outcome.
Whilst the outlook may appear to be doom and gloom, early intervention can give otherwise anxious and sceptical stakeholders the confidence to support and continue to work with a potentially streamlined, restructured and more vigorous business.
Charles Brook, Stephen Wainwright or Allan Cadman will be happy to discuss any issues of concern on an individual basis and without obligation. Please don’t hesitate to contact us for a chat or refer a client in complete confidence.