BREXIT: Manufacturing and retail businesses at biggest risk from economic uncertainty, according to survey

The firm surveyed attendees at the Pinsent Masons Restructuring and Insolvency Conference last week, to gauge their views towards some of the issues impacting the industry in 2016. Of the over 400 attendees at what is the largest industry conference in Europe, 62% believed that business failures would increase in the aftermath of the UK's vote to leave the EU.

"Although consumer spending has yet to be impacted dramatically, any continuing fall of the pound is likely to translate into more cautious consumer spending as imported goods increase in price," said insolvency law expert Nick Pike of Pinsent Masons. "The UK's manufacturers are also likely to see increased prices for imported parts."

"Very little is clear about the terms on which the UK will leave the EU and so businesses are in a period of great uncertainty. Insolvency experts are firmly in agreement that until those issues are resolved, businesses are likely to remain cautious about investment decisions. These results show that insolvency practitioners are largely on the same page and would welcome measures to provide a stronger framework to rescue viable businesses, whilst creating an environment that supports employment," he said.

Almost half of respondents to the Pinsent Masons survey agreed that the manufacturing and retail sectors combined faced the biggest short-term impact from the Brexit vote, with 22% of respondents predicting manufacturers would be worst off and 22% predicting retailers would be worst off. The real estate sector is also vulnerable, with 17% of respondents predicting it would be worst affected over the next 12 months.

Only 12% of respondents predicted that the financial services industry would be worst affected over the next 12 months - the same proportion that believed the hospitality and leisure sectors would be hardest hit. Respondents were more optimistic about the immediate impact of the Brexit vote on UK infrastructure, with only 9% of respondents expecting the industry to be hardest hit over the next 12 months.

According to the Centre of Retail Research, 18 retail companies have already gone into administration in 2016 with the loss of over 23,000 jobs.

Among proposals for corporate insolvency reform published by the UK government in May was a new debtor-triggered moratorium period, during which companies in financial difficulty would be given time to consider the best approach for rescuing the business free of the threat of enforcement action by creditors. A similar right is already available to small companies seeking a company voluntary arrangement (CVA), and to companies in administration.

Two thirds, or 69%, of respondents to the Pinsent Masons survey backed the government's plans to extend this right to most businesses facing a broader range of insolvency procedures.