As British prime minister Theresa May continues to try to win over the support of parliament for a withdrawal agreement from the EU, Euler Hermes has sounded the alarm on the potential for an uptick in business insolvencies, whatever the eventual Brexit outcome.

The trade credit insurer’s latest annual insolvencies report shows a sharp rise in the number of UK business failures in 2019, regardless of if a Brexit deal is agreed before the March 29 deadline, with an additional 23,660 British businesses expected to go to the wall, a 9% increase over last year.

Just five countries – China, Slovakia, Denmark, Chile and Sweden – are expected to see bankruptcies rise by a greater percentage. On a global level, Euler Hermes is forecasting the average increase in insolvencies at 6%.

2018 saw a 12% upswing in UK business insolvencies, as increasing late payments, sluggish consumer spending and soft GDP growth weighed on almost every sector of the UK economy. “Overall, the prolonged high Brexit uncertainty has significantly reduced the pockets of resilience in the economy,” says Ana Boata, European economist at Euler Hermes.

In a research note, Andrew Goodwin, senior economist at Oxford Economics, says “a number of commentators are wrong in concluding that the result of [last week’s withdrawal agreement] vote made a ‘softer’ Brexit, or even no Brexit, more likely”, and puts the chances of “no deal” as high as 35%.

In this scenario, Euler Hermes sees UK corporate failures rising by as much as 25%. Were the UK to remain in the EU in 2019, this number would fall to just 2%, although Euler Hermes sees only a 5% chance of that happening.

Speaking to GTR, Milo Bogaerts, chief executive of Euler Hermes UK and Ireland, says that the ongoing uncertainty means trade credit insurance will be more in demand than ever. “Figures from the Association of British Insurers (ABI) show that trade credit insurance carriers paid out a record amount to help firms cope with the non-payment of bad debts in the first half of 2018, due to the weakened trading environment. The industry hasn’t seen the value and amounts of claims and payments this high since the height of the financial crisis in 2009,” he says. “With an increasing number of firms under financial stress, it will be even more important to maintain a close working relationship with a trade credit insurance partner.”

Although the Association of British Insurers (ABI) figures show the UK’s trade credit insurers currently cover a record £340bn of trade to help businesses navigate the increasingly tricky environment, the association says that too few firms are using trade credit insurance. Given the gloomy outlook post-Brexit, the trade credit insurance industry has a prime opportunity for growth as companies start preparing for the worst.

“What impact is Brexit having? For us, because we do a lot of new business activity, we are having a great time,” Trevor Price, managing director of the Global Trade Credit Alliance (GTCA), told GTR recently, adding that – for now – there is plenty of capacity, although the longevity of that capacity is less certain.