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True impact of hard Brexit in Republic 'will be seen fully in 2020'

Delay: David Van Dessel
Delay: David Van Dessel

By Ellie Donnelly

The true impact of a hard Brexit on Irish businesses may not become apparent until next year, according to Deloitte.

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With fewer than 100 days until the UK is due to leave the EU, David Van Dessel, partner at the consulting group, said that if the country crashes out of the EU without a deal it could have a "material impact" on company bankruptcy levels in Ireland.

This is more likely to be reflected in the 2020 insolvency statistics, he said.

"Directors are very slow to get external assistance when their business is experiencing financial problems. In particular, family companies deal with issues privately," Mr Van Dessel said.

"The natural approach (when a company is in trouble) is to sell more, but sometimes the problem is greater than that.

"For companies in the front line of Brexit, while the financial impact may be quick, there will be a delay in the firm getting to insolvency. For many the last thing they will do is get external advice, making it harder to reach agreements with creditors," he added.

Overall, the number of service sector firms filing for insolvency has jumped in the six months to June 30.

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The sector - which spans industries from bars and hotels to banking - was responsible for two out of every five insolvencies during the period, up 27% on last year, according to figures from Deloitte.

The majority of these firms are likely to be property-holding companies, Mr Van Dessel said.

Businesses operating in the real estate and property services sector were the second most common industries to be affected by insolvency during the first half of 2019.

Overall, 310 businesses were declared insolvent during the six months, down 29% on the same period last year.

Creditors' voluntary liquidations (CVLs) were the most popular means of addressing corporate insolvency in the first half of the year, accounting for 206, or two thirds, of the total number.

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