Brexit ‘could increase number of business insolvencies’, ICAEW suggests

Brexit ‘could increase number of business insolvencies’, ICAEW suggests

A survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that the number of businesses declaring insolvency could potentially rise as a result of the impact of Brexit on the UK economy.

Image result for insolvencyThe survey revealed that 73% of individuals working in the insolvency and business restructuring industry believe that Brexit poses the ‘biggest threat’ to businesses over the coming years. Meanwhile, 56% of those surveyed also believe that a rise in interest rates presents a risk to UK businesses.

The survey suggested that the retail sector could be the worst affected by insolvency, with 77% of respondents believing that it would be the sector most likely to experience ‘increased financial difficulty’.

Affected firms should seek early help in a bid to restructure their finances, business processes or management, the ICAEW stated.

Reflecting on the issue, Bob Pinder, Regional Director at the ICAEW, said: ‘We are in no doubt that businesses in the UK face difficult times ahead. A sharp and unexpected rise in the cost of doing business can make managing liquidity tough.

‘We believe that a change in attitudes is critical in order to successfully avoid substantially increased corporate insolvencies – confronting business issues, rather than being ashamed of them.’

Data reveals confidence amongst UK businesses has taken ‘major knock’

businessData published by the Institute of Chartered Accountants in England and Wales (ICAEW) has revealed that confidence amongst businesses in the UK has taken a ‘major knock’, and has fallen into negative territory.

The ICAEW’s Business Confidence Monitor fell from a reading of 6.7 in the second quarter of this year to -8 during the third quarter.

Issues that came to light as a result of the snap General Election and the subsequent hung Parliament contributed towards the negative reading, the ICAEW suggested.

The data also revealed that the ongoing Brexit negotiations between the UK government and EU officials have also been having an effect on firms’ confidence levels.

Matthew Rideout, Director of Business at the ICAEW, commented: ‘Since the announcement of the General Election, a vacuum has been left with government’s attention swallowed by a hung Parliament and the start of EU negotiations.

‘The industrial strategy has been lost in the void, coupled with no clear signal towards post-Brexit policy. As a result, businesses cannot see through this haze of uncertainty and are struggling to look further than the end of the next quarter in terms of their decision making.’

Less than half of businesses have discussed Brexit risks, ICAEW suggests

A survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that just 43% of firms have discussed the risks that Brexit poses to their business.

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The ICAEW found that only 29% of businesses surveyed have made Brexit plans. 6% of firms expect a positive Brexit outcome, whilst 40% predict that EU negotiations will have a negative impact on their business.

Additionally, only 21% of firms surveyed would be willing to explore new markets.

The research also suggested that 29% of businesses believe that the free movement of goods, services and capital between the UK and the EU is essential for growth. One fifth of respondents stated that they also value access to a skilled EU workforce.

Michael Izza, Chief Executive of the ICAEW, said: ‘With 20 months until departure, it is now the government’s responsibility to help pave the way for business success once we have exited the EU.

‘Issues raised within our research – such as access to skilled EU workers and the free movement of goods and services – should be firmly placed on the Prime Minister’s radar when she engages in talks with the EU to ensure the priorities of business are fully considered and complacency is avoided.’

Small Business Taskforce outlines priorities for UK firms in election manifesto

The Small Business Taskforce has outlined its priorities for UK small firms ahead of the General Election on 8 June.

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The Taskforce, which is comprised of 14 organisations, including the Institute of Chartered Accountants in England and Wales (ICAEW), Enterprise Nation and the Entrepreneurs Network, has set out six key recommendations in its election manifesto, which it believes will help ‘build a positive and progressive business case for Britain’.

Amongst these key recommendations is a requirement for the next government to provide an environment which ‘champions the role of small businesses’, create a tax system that supports businesses of all sizes and supply business support that adds value.

The manifesto also calls for the next government to provide an advantageous pensions and benefits system, supply procurement opportunities that are beneficial to all and create a workforce that is equipped for enterprise.

Clive Lewis, Head of Enterprise at the ICAEW, commented: ‘Whatever the outcome on 8 June, the incoming government must provide a solid platform for small businesses to flourish and grow.

‘Currently businesses are cautious about the future and are holding back on investment, therefore it’s vital that, in the run-up to the General Election, all political parties spell out how they plan to encourage businesses to invest in long-term growth.’

Significant rise in business confidence, ICAEW reveals

Business optimism has moved into positive territory in the second quarter of this year, according to business confidence monitor data published by the Institute of Chartered Accountants in England and Wales (ICAEW).

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Confidence amongst UK firms has increased from -8.7 in the first quarter of 2017 to 6.7 during the second quarter.

However, the ICAEW has warned that, with the General Election and Brexit negotiations looming, businesses have decided to put recruitment and wage growth on hold.

As a result, the ICAEW is urging all political parties to outline ‘how they are going to address the problem of business investment’.

Commenting on the apparent rise in business confidence, Stephen Ibbotson, Director of Business at the ICAEW, said: ‘It’s encouraging to see that confidence is starting to rise after a sustained period of decline.

‘Yet against this improved sentiment, businesses are not investing in staff and wages and may well be waiting to see what happens in the political arena, particularly in relation to how the EU negotiations play out.’

ICAEW urges Chancellor to reconsider timetable for implementing key initiatives

The Institute of Chartered Accountants in England and Wales (ICAEW) has called for Chancellor Philip Hammond to re-evaluate the timetable for the successful implementation of key government initiatives, such as Making Tax Digital (MTD) and the Apprenticeship Levy.

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In a letter to the Chancellor ahead of the 2017 Spring Budget on 8 March, the Institute warned that the cumulative effect of MTD, the Levy and the obligation to report payment practices, combined with uncertainty caused by Brexit, may ‘act to hold business back’.

The ICAEW has recommended that the initiatives be implemented gradually over a period of ‘at least ten years, if not longer’.

A call for additional resources to be provided to the Regulatory Policy Committee was also made by the Institute.

It believes that this may help the Committee to ‘better measure the impact of the new regulations’, and supply ‘comprehensive advice’ on the timing of their introduction.

Michael Izza, Chief Executive of the ICAEW, commented: ‘Concerns over the time commitment required from a growing compliance list, or the confusion caused by the sheer churn in new regulation, all create an environment which does not incentivise the kinds of productivity-enhancing investment the government wants business to carry out.’