New research suggests UK would see a 14% hike in firms going under
A no-deal Brexit could result in a sharp increase in the number of UK businesses going bust, according to a new report.
Netherlands-based insurance giant Atradius said a 鈥渄isruptive鈥� exit could result in UK corporate insolvencies being 14% higher 鈥� around 2,300 more firms 鈥� than under a smooth transition which would see adjustments to the new trading arrangements until 2021.
A no-deal scenario would shatter confidence and depress businesses investment, resulting in industrial production falling by 2% this year, Atradius said. UK GDP would fall by a similar amount in the absence of an orderly exit, it added.
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Companies would be hit by lower demand as consumers felt the pressure on incomes, leading to a knock-on effect resulting in a raft of closures.
While WTO tariffs would be imposed on UK exports 鈥� averaging out at nearly 6% 鈥� Atradius said the threat to services was even greater. 鈥淲ithout regulatory harmonisation WTO rules would not prevent the EU from blocking British firms offering services in the EU,鈥� it said.
It wasn鈥檛 just the UK which would suffer, Atradius said. 鈥淔or the EU27 the insolvency outlook is similar, although it is much milder.鈥�
Countries with strong trading links to the UK could feel the impact, notably Ireland, which emerged as the most vulnerable EU member to a no-deal Brexit and would, Atradius said, see insolvencies 4% higher than if a deal had been struck.
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