Hard Brexit or Soft Brexit? Which Scenario Will Have The Biggest Impact On Business Insolvency?

Most analysts are now forecasting a significant rise in business insolvencies over the course of the next 12 months. The UK is expected to be the country most affected by Brexit in this regard but will a soft Brexit lessen the impact?

Business owners are likely to be the least enthusiastic people when it comes to the triggering of article 50. As with any period of economic uncertainty, there are likely to be delays to investment and expansion plans and this can have a knock-on effect further down supply chains.

Exporters will be particularly effected when they consider a future where tarrifs might be introduced on good exported to EU countries. 55% of companies already report that their finances have been hurt since last June when the original vote took place.

One thing that may lessen the impact of Brexit could be a so-called ‘soft Brexit’. Just 1% of businesses surveyed felt that this would lead to significant increases in insolvencies compared to 8% who thought that a hard Brexit would have no impact on business insolvencies.

Until the final negotiation takes place uncertainty will continue over which line the government will take. The smart money at the moment is on a hard Brexit.