Brexit uncertainty may see rise in UK bankruptcy

The UK has voted to leave the European Union. It is scheduled to depart at 11pm UK time on Friday 29 March, 2019. England voted for Brexit, by 53.4% to 46.6%. Wales also voted for Brexit, with Leave getting 52.5% of the vote and Remain 47.5%. Scotland and Northern Ireland both backed staying in the EU. Scotland backed Remain by 62% to 38%, while 55.8% in Northern Ireland voted Remain and 44.2% Leave.

David Cameron, his Chancellor George Osborne and many other senior figures who wanted to stay in the EU predicted an immediate economic crisis if the UK voted to leave and it is true that the pound slumped the day after the referendum - and remains around 10% lower against the dollar and 15% down against the euro.

But predictions of immediate doom were wrong, with the UK economy estimated to have grown 1.8% in 2016, second only to Germany's 1.9% among the world's G7 leading industrialised nations. The UK economy has continued to grow at almost the same rate in 2017. Inflation has risen since June 2016 to stand at 3.9%, but unemployment has continued to fall, to stand at a 42 year low of 4.3%. Annual house price increases have fallen from 9.4% in June 2016 but were still at an inflation-beating 5% in the year to August 2017, according to official ONS figures.

The current uncertainty arising from Britain’s exit from the European Union may see a rise in people facing bankruptcy in the coming years. Some businesses are downsizing and many others are implementing a hiring freeze. This may lead to an increase in people struggling to pay their debts.

There is also significant uncertainly at the moment regarding the status of EU migrants’ right to work in the UK post-Brexit, making them unattractive hires. EU migrants currently working in the UK also face the possibility of losing their jobs depending on the final terms of the government’s Brexit deal.

While much of the impact of Brexit is yet to be seen, the lack of clarity on the final terms of Britain’s relationship with the European Union currently leaves UK workers in a precarious position. It is reasonable to infer that we will see a marked increase in people struggling with debt and a corresponding rise in bankruptcy petitions as a result of Brexit.

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