Insolvencies firm Begbies Traynor reports number of companies in financial distress fell 6% in three months after EU referendum.
The number of UK companies struggling to stay afloat has fallen in a further sign that the economy is holding up after the Brexit vote.
In the three months after the referendum on 23 June, the number of firms in significant financial distress fell 6% to 248,916 from the preceding quarter, according to the insolvency company Begbies Traynor. The number of distressed companies fell 2% from a year earlier.
Businesses across the UK economy showed resilience with the biggest improvement in the construction sector, where the number of distressed firms fell 11% from the previous quarter. Distressed professional services firms reduced by 10% as work flowed in from clients seeking advice on Brexit, Begbies Traynor said.
Ric Traynor, executive chairman, said: “The UK economy appears to be in a stronger position than expected following the EU referendum result. While we wait to see whether the government opts for a ‘hard’ or ‘soft’ Brexit strategy, businesses at least appear to be better placed to tackle any new challenges on the horizon.”
The survey cements indications that a much-feared slump in economic activity prompted by uncertainty over Brexit has so far failed to materialise. Economists expect growth to have more than halved in the third quarter but for the economy to have avoided a recession in the second half of the year when GDP figures are released on Thursday.
The relative resilience of the economy since the Brexit vote has largely been attributed to consumer willingness to keep spending and strength in the services sector. Surveys soon after the referendum suggested a sharp drop in activity but warm weather and recovery from the initial shock of the vote have supported spending by businesses and households.
Some economists still expect a sharp and possibly prolonged slowdown even if Britain avoids a technical recession of two quarters or more of contraction. With divisions in her cabinet over the terms for leaving the EU, Theresa May, the prime minister, has said she will start formal separation, known as article 50, by the end of March 2017.
Traynor said: “Given that the details of the future Brexit deal are as yet unknown, it is still too early to tell what longer-term impact the leave decision might have on the UK economy. Clearly though, the stronger the UK economy becomes pre-Brexit, the better it will be able to withstand any post-Brexit shocks.”