New analysis from KPMG shows that despite economic turbulence in the wake of the EU referendum, the number of companies entering formal insolvency across England and Wales continued to fall during the third quarter of 2016.
The numbers, taken from notices in the London Gazette, indicate that there were 277 corporate insolvency appointments in the three months to 30 September 2016, down from 299 in Q2 and 300 in Q1.
KPMG’s UK head of Restructuring, Blair Nimmo, believes this sustained fall is a reflection of the fact that despite the initial impact that the result of the referendum had on the UK economy, businesses, investors and lenders alike have broadly taken a pragmatic and measured approach to Brexit.
He said: “The good news is that the predicted post-referendum spike in insolvencies hasn’t materialised, as companies refused to panic in the immediate aftermath of the vote, but instead adopted a ‘wait and see’ attitude. Many sought to keep up those good habits developed in recent years regarding keeping a close grip on cash and cost which has left them in good stead.
“However, we shouldn’t be naïve to the fact that this period of relative stability may not be here for the long term. Indeed, with the Prime Minister having now set out a timetable for Brexit, many companies are bracing themselves for further economic volatility and uncertainty as negotiations kick off and the parameters of what Brexit actually means start to be defined.
“There undoubtedly will be some companies who are already feeling the pinch due to the significant fall in the value of sterling, while others will be looking nervously towards their supply chains. Added to this are pressures unrelated to the referendum, such as increases to the Living Wage and movement in oil prices.
“Nevertheless, overall confidence in the economy is high, and as our recent CEO survey findings reveal, business leaders are largely positive about the country’s future and of their businesses.
“In order to continue to grow and thrive in a post-Brexit environment, companies must ensure they plan appropriately so they can adapt to any changes in market conditions, particularly those who trade with the EU. Currently we’re working with businesses across sectors to help with contingency planning and to ensure they adopt a nimble approach to the impending transition. Effective cash management, operational efficiencies and cost reductions continue to play an important role in achieving this approach.”
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.