BREXIT: The future is uncertain

It may seem like a world away now, but back earlier this year before the referendum, NASDAL (National Association of Specialist Dental Accountants and Lawyers) identified six ways in which a vote for Brexit could have an impact on dentistry in the UK.

The six ways were:

• Recession.Those private practices who depend on elective treatments for a significant part of their income could notice a drop in demand and even ‘regular’ care is likely to see a reduction as patients put the check-up off for yet another six months, year or longer.
• Status of EU dental professionals. EU ‘immigrants’ currently make up around 5% of the total NHS workforce¹.
• NHS Incorporation.A major hurdle thrown up by LATs against the incorporation of NHS practices is that it falls foul of EU tendering law.
• Reformed NHS contract.Stalling on the revised NHS contract is likely to get worse.
• Sale of practice.Uncertainty around the new contract certainly hasn’t affected the current market and the further down the track the decision goes, the more that potential buyers may be prepared to invest?
• Reduction in Lending. Will we see money leave the UK economy and move to those options perceived to be safer?

Following the UK’s momentous decision to leave the European Union on 23^rd June, how many of these have come to pass? The truth is that the jury is still out. There is still great uncertainty and as it becomes clearer as to how much time and effort will need to spent by government in negotiating the UK’s exit from the EU, it seems likely that the revised NHS contract will be some way down the list of government priorities.

The status of EU citizens in the UK has still not been settled and many may well be feeling uneasy in the current climate. It also seems likely that there will be strict controls placed on future immigrants. Although there was a downgrading of the UK’s credit rating to AA by Standard & Poor’s, the current mood music from many of the major lenders is that it is ‘business as usual’. The practice sales market is still incredibly buoyant and shows no sign of slowing up. Indeed the most recent quarter’s NASDAL goodwill survey showed valuations over the period in a substantial rise of over 11% on the previous quarter to goodwill of 138% of gross fees and what can only be termed a ‘Brexit bounce’.

In terms of the wider economy and the spectre of recession, although the general “corporate finance” deal flow has certainly slowed down, it seems that at present there have been no Brexit specific dental issues, but perhaps less confident patients maybe delaying treatments. In turn, this couldhave asignificant (but delayed) impact on private dental revenues, as was the case in 2009-12.

NASDALs findings follow a recent Close Brothers Asset Finance surveywhich shows that the jury is still out on the impact Brexit has had on SMEs more generally. The study reported that more than 56% of SMEs have felt no impact on levels of business following the decision to leave. Of those who had felt an impact, 40% had seen an improvement while 43% have seen a decrease.

¹ https://fullfact.org/immigration/immigration-and-nhs-staff/

Posted by Gemma