Brexit could be “disaster” for struggling UK exporters, despite the boost from a weakened pound, according to insolvency firm Begbies Traynor.
About 21,000 UK manufacturers which rely heavily on exports could be tipped over the edge if Britain votes to leave the EU in the 23 June referendum, the firm warned this morning.
Despite UK exporters experiencing a boost in recent weeks thanks to the ongoing sterling weakness, the UK’s largest exporting industries continue to suffer from rising levels of financial distress which didn’t bode well for the sector in the event of a potential Brexit, Begbies said.
The firm’s ‘Red Flag Alert’ research for the first quarter of 2016, which monitors the financial health of UK companies, reveals that 21,061 UK manufacturers, many of which rely heavily on exporting, ended the period in a state of ‘significant’ financial distress – 20% higher than the equivalent period last year.
Of the UK manufacturing sectors covered by the research, the number of food and beverages producers experiencing ‘significant’ distress rose the fastest, at 29%, followed by a 21% increase in the broader manufacturing sector and a 17% increase in the automotive sector.
Begbies partner Julie Palmer said: “Our data shows that the UK’s exporting industries are already under significant financial pressure and can ill afford any potential risk to the 50 percent of British exports that go into the EU.
”The Red Flag manufacturing figures show that the threat of uncertainty surrounding the referendum has already put the brakes on this segment of the economy, which should be accelerating with the benefit of recent sterling weakness, with many UK firms adopting a ‘wait and see’ approach to any change to the UK’s relationship with the EU.
”Considering the current struggles that the UK manufacturing industries are facing, as seen most starkly in the steel industry recently, and the significant potential impact of a Brexit vote, it is crucial that firms make contingency plans for either outcome of the referendum to avoid further deterioration in their financial health.”
No comments yet