No-deal Brexit risks driving up insolvencies

The UK leaving the EU without a deal would be a major disruption, causing business insolvencies to be higher in the UK and EU27.

A no-deal Brexit would increase uncertainty in the short-term, weighing on economic growth in the UK especially through higher inflation and trade frictions. EU27 countries would also face lower GDP, but to a more limited extent due to lower trade dependence.
We estimate that a disruptive Brexit could cause UK corporate insolvency growth to be 14% higher than in a smooth transition. The retail sector is particularly exposed due to higher inflation while the manufacturing and chemicals sectors would suffer due to trade barriers being imposed.
The impact on insolvencies in the EU27 would be much more moderate, but still significantly negative. Those countries with close trade ties to the UK like Ireland, Belgium, the Netherlands, and Denmark are forecast to see the largest impact on insolvencies.