Member Article

Brexit shock briefer than expected, says North East R3 Chair

New research from insolvency trade body R3 has indicated that almost two-thirds (63%) of regional businesses have yet to feel any financial impact, positive or negative, following Brexit.

But while 11% of the businesses surveyed - equivalent to 18,000 firms - across the North East, Yorkshire and Humberside reported that they had already benefitted from the vote to leave the EU, almost half as many again (16%, or 28,000 businesses) said the result was having a negative impact of their operations.

The remaining ten per cent said were unsure of whether the referendum result was having any impact on their operations.

Neil Harrold, North East chair of R3 and a partner with Hay & Kilner Solicitors, said: “With the North East having so many close links to the EU in terms of infrastructure and finance, the immediate implications of the referendum result here could perhaps have been expected to be especially strong, but in fact, the immediate shock of the result was much briefer than expected.

“Many businesses - and importantly, consumers - have adopted a ‘business as usual’ approach since then in advance of anything specific actually taking place.

“The UK is, of course, still a member of the EU, and will be for at least the next two years, so the impact of the vote itself will be limited for the time being - when we find out what Brexit actually means, rather than just that ‘Brexit means Brexit,’ things might begin to change.”

Across the UK, the businesses most likely to say they have seen a negative financial impact from the referendum result are large companies employing over people, with 23% of them saying the result has hit them in this way, compared to just two per cent saying they’ve experienced a positive impact.

Neil Harrold continues: “In the short-term at least, there may be a few instances of ‘Brexit’ being cited as a reason by companies when they run into trouble, but anecdotally, while our members say they are yet to see any increase in Brexit-related appointments, some have reported an increase in calls from worried business owners looking for advice.

“Brexit will be causing genuine problems for a significant minority of companies, and it will be benefitting others, with the sharp fall in the value of the pound being the primary factor behind this.

“Importers will have been hurt, while exporters may have seen an increase in demand for their products, and uncertainty over the future of the UK-EU relationship may put some important deals on hold, at least temporarily.

“While a number of recent surveys have reported business confidence falling since the vote, this doesn’t appear to have yet translated into a financial impact for most regional businesses, and it will be interesting to see if this situation changes as Britain moves closer to actually exiting the EU.”