By now most of us have had a little time to recover from the shock of the unexpected vote for Britain to leave the EU. It’s perfectly understandable that many businesses across the UK will be a little more anxious about their future today than they were on the morning of the vote. But it’s now time to put the panic to one side and start to seriously consider the prospect of life outside the relative security of Europe.

A warning from trade credit risk insurer Atradius – one of the few companies to publish figures on the estimated short-term economic affect of Brexit – suggests that UK gross domestic product could be cut by up to three percent in the next two years.

The statement from the insurer explained that although most of the effects will be felt over the longer term, the fall in the value of the pound has already delayed planned investment in businesses and staff. It will be the structure of trade agreements that determines the impact over the longer term.

Most UK businesses will navigate the turbulent waters

So far reactions from firms have focussed on the financial and property markets, as well as the potential Brexit impact on SMEs. Many have also said that David Cameron’s resignation adds to the sense of uncertainty.

The campaign was not won or lost on economic grounds, but British businesses will have to live with the negative consequences that are now likely to occur. The initial headlines have been dominated by the fall in the value of the pound and the damage done to the FTSE 100. However, in the short-term, those businesses trading overseas will benefit from the lower exchange rate, which will increase the value of their products and services to overseas buyers.

The UK insolvency regime remains optimistic about the future, with the vast majority of SMEs expected to navigate the uncertain economic waters successfully. Inevitably, some businesses will be adversely affected by the decision to leave. In this case, the turbulence in the capital markets could impact the liquidity of some businesses and catch them out.

Recent history has taught us that periods of such market volatility lead to the direct insolvency of some companies, so it’s essential companies are primed and ready to act if they find themselves in a vulnerable position. Boosting the liquidity of a business can be achieved in a few relatively simple steps.

Uncertainty for the insolvency regime

Leaving the EU is also expected to a have a major impact on the corporate insolvency regime here in the UK. The rules that govern the company insolvency process are intertwined with rules on tax, employment and property, and all of these are linked to rules across Europe.

Speaking on behalf of the insolvency trade body R3, Andrew Tate, the organisation’s president, said: “While domestic insolvency legislation itself is likely to be unaffected, the insolvency profession is involved in a lot of cross-border work in Europe. One key change is that it could become much harder to retrieve assets on behalf of creditors from across Europe.

“With some exceptions, once the UK leaves, a UK insolvency practitioner’s powers may no longer be automatically recognised elsewhere in Europe, nor will UK insolvency proceedings enjoy automatic recognition. New deals will need to be negotiated.”

The timing of the referendum was also unfortunate for the insolvency regime given that the government is currently in the midst of renewing the corporate insolvency framework. There may now be delays in this work as some of the proposals have come from EU harmonisation programmes. We’ll have to see how this fits into the government’s plans over the next few months.

How can we help?

Ultimately, the key to good decision making for UK businesses over the coming months will be a measured consideration of the facts as they become known. However, if you do see signs of an emerging problem, in this uncertain economic climate it’s essential you act quickly.

If you are suffering from a cash-flow or liquidity problem, or are unable to pay your tax returns on time, please call our directors’ helpline on 08000 746 757 or email: for the cost and obligation-free advice you need.