Following the Conservative’s victory at the general election, one would like to think that the uncertainty surrounding Brexit for UK businesses has at least eased slightly, especially as organisations will be aware of the government’s stance on Brexit and their commitment to the 31 January deadline. Additionally, there are a few reasons which should appease even the most pessimistic of businesses in relation to what the future may hold for them post Brexit.

Firstly, Sterling had hit an 18-month high against the US dollar and a three-year high against the euro after the Conservative party won the general election with a majority. Investors certainly welcomed the results as the Prime Minister’s majority sheds some clarity and certainty on the Brexit topic. UK growth should undoubtedly receive a lift from both the easing in Brexit uncertainty, which should boost business investment, and significantly higher government spending, although growth is still expected to remain quite sluggish. This is due to there being little spare capacity in the economy and an upturn in growth can only encourage the Bank of England to raise rates in a bid to prevent a build-up of inflationary pressure. Nonetheless, the certainty that comes with a five-year administration should create confidence and bring back the aspirational buyers and sellers that have been lacking since the EU referendum result.

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Back in March 2018, following the highly publicised collapse of Toys R Us and Maplin’s, there was intense speculation at the time that the child and parenting chain store Mothercare was the next high-profile casualty on the UK high street.

At the time, Mothercare strenuously denied claims that its’ closure was imminent and instead insisted it was generating cash and that performance remained ‘in line with expectations’. This was despite the chain suffering significant share price falls over the past few years, with its peak valuation dropping below £503 million. Following a further setback last year, having experienced disappointing Christmas sales which led to the company having to cut profit expectations for January, its boss Mark Newton-Jones stated that he believed the company had the support it needed to continue to become a global retailer. Mr Newton-Jones even released a statement to reassure shareholders, by stating:

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Over the years, we at PCR have investigated several directors for not complying with their directors’ duties in accordance with the Companies Act 2006 and the Insolvency Act 1986.

Quite often, these directors would be reported to the Insolvency Service who would then carry out a thorough examination of any potential breaches by directors or shadow directors. The most common outcome following an investigation is a disqualification for the director, mainly attributed to the fact that they in some form or another failed to adhere to their duties whether knowingly or unknowingly. The fact that the Insolvency Service have released statistics revealing that 70 company directors had received ‘substantial’ bans for misconduct in the UK during 2018/19, did not surprise us in the slightest, as we regularly come across numerous directors who are not fully aware of their duties. In addition to ‘substantial’ bans, there were also a number who have been disqualified for a period of 11 to 15 years, under Section 6 disqualifications (bans for unfit directors of insolvent companies). However, there were hundreds of other bans handed out to directors who failed to comply with their duties as outlined by the Companies Act 2006 or who committed offences under the Insolvency Act 1986. According to the statistics released by the Insolvency Service, the most notable findings of the report were:

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Two years on, following the demise of Monarch Airlines, PCR had speculated whether the disappearance from the departure boards of the once successful airliner would ease the market for the remaining carriers. In fact, this was far from the truth, as PCR Insolvency Practitioner Danny Allen hinted in an article written on 16 October 2017, that with the current volatile market, Monarch Airlines may not be the last airline casualty we would witness in the short term.

Fast forward almost two years, and Thomas Cook finds itself in the same unfortunate predicament Monarch Airlines found itself in during the latter half of 2017. When the news of Thomas Cook’s demise was confirmed in the early hours on 23 September, we were not in the slightest bit surprised to see its collapse. For industry experts observing the company’s fortunes (or misfortunes) with a microscopic eye, there have actually been several warning signs which pointed to the downfall of a company which had enjoyed an illustrious past.

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There doesn’t seem to be a month which goes by where we do not hear about another retailer struggling and facing the serious possibility of restructuring just in order to survive on the UK high street. Inevitably, some of us may be forgiven for thinking that our online shopping habits have been a major contributing factor to this, especially with several retailers failing to adapt to change and offering the consumer a unique shopping experience in order to bring customers back through the doors.

Furthermore, there are suggestions that the difficult high street predicament currently faced by retailers has been exasperated by landlords who are trying to squeeze every penny out of commercial tenants. If you throw in the continued uncertainty surrounding Brexit, the increase of business rates, the rise of the national minimum wage and even regulatory changes such as GDPR, there does appear to be a plethora of reasons as to why the UK high street is in difficulty. 

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