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Uncertainty is the curse of business confidence

A period of unprecedented worldwide political and economic change is upon us at the moment.

The vote to leave Europe, the election of Donald Trump as American president alongside further elections planned in France and Germany in 2017, we are seeing a whirlwind of change and uncertainty in the political and business world as we know it.

Brexit has benefitted some businesses and has had a negative effect on others, but the long term impact is still unclear.

The US election provided another shock with Republican businessman Donald Trump taking charge at the White House. So far, there has not been the anticipated meltdown in the markets, but the future under his presidency is unclear.

As always, there will be winners and losers. Exporters have benefitted from the weaker pound making their goods more competitive, while those who import raw materials will see costs rise.

Locally, we are looking at the potential impact of devolution, the development of the HS2 project and the effect of the possible Northern Powerhouse coming to fruition.

The biggest concern is that the political and economic uncertainty will hit business confidence which in turn, stifles investment.

Local business owners tend to be pragmatic, realising they cannot change what has already happened.

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Successful company directors are those who adapt, plan and have confidence to be proactive and invest, rather than those who hold back, sitting on their hands, hesitating.

According to the Bank of England’s recent Agent’s summary, business sentiment recovered further from its post-referendum fall, but remained relatively fragile alongside significant uncertainty around the longer-term outlook.  Activity growth had remained resilient.

Surveys point to broadly stable, or slightly lower, investment spending over the coming year, with uncertainty over future demand and trading arrangements expected to drag on spending.

Price pressures have built through supply chains following sterling’s depreciation, but there had been limited impact on consumer prices to date. We will wait and see if this changes.

The insolvency industry is always ready to react to clients’ needs as they respond to recent events and changes in circumstances to the business world.

Company insolvency figures have remained steady over the last few years but seen a slight increase in the last two quarters, whereas individual insolvencies have seen a significant increase over the last 12 months.

For the insolvency sector there is still a demand for turnaround support and restructuring, often involving arranging finance and new investment.

As always, the key to successfully salvaging any business is to act as soon as there are signs of difficulty, rather than delay and see the problems escalate too far out of control.

 

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