Will Brexit Increase Business Debt?
Brexit for now hasn’t resulted in the economic catastrophe many people predicted. This may be largely down to the fact that the divorce from the EU is likely to be long and protracted. Formal notice of the UK’s intention to leave has yet to be given and we are left with a period of uncertainty which is set to last until well into the autumn. So can we expect business debt levels to rise or fall in the short to medium term?
At present it seems that the economic growth was already slowing prior to Brexit. This may in part have been due to uncertainty about the result, but the majority of people never really considered the possibility of Britain exiting.
The reality is that the global economy as a whole was already showing signs of strain and that there were much greater forces at play than one small country’s decision to leave a continental union. In June, the World Bank had already slashed its forecasts for global growth, highlighting an “insipid” recovery and a potentially dangerous build-up of corporate debt levels.
Past economic shocks have shown that recessions can result when the supply of money into an economy is restricted and business are unable to acquire the funding they need. The Bank of England itself will find it more expensive to borrow now that ratings agencies have downgraded the UK’s credit rating.
Stormy times are ahead, it’s important to prepare in advance if you have any concerns over money that is owed to your business.