Insolvencies were down in H1, but will end up 27 per cent above last year’s

Insolvencies in the UK are set to jump 27 per cent this year as the fallout from the coronavirus continues, according to Atradius.

The credit insurer said that the growth in companies going bust will outpace the global figure (26 per cent), with the UK also seeing the largest GDP contraction in Northern Europe.

Turkey is expected to see the largest growth in insolvencies globally at 41 per cent, followed by the US and Hong Kong at 39 per cent.

Simon Rockett, senior underwriting manager for Atradius UK, said: “The coronavirus pandemic has been indiscriminate in its spread across the globe, resulting in lockdowns and containment measures which have had a tangible impact on economic markets.

“This has included delays in production, a drop in business and consumer demand and widespread business closures.

“While many countries have implemented fiscal stimulus measures to soften the blow, these cannot last forever and worldwide economies are starting to realise the true economic impact in the form of recession and a bleak return to rising insolvency levels.”

Atradius said that the number of insolvencies in the UK were “peculiar” in H1, seeing a decline of 20 per cent year on year which did not reflect the state of the economy.

The credit insurer said that this was likely because the UK had announced changes to its insolvency regime prior to the pandemic. Temporary measures are also in place for struggling businesses until the end of this month.

The lowest increases globally will all be in Europe, Atradius said, naming Germany, France, Austria, Belgium, Switzerland and Italy.

But Atradius said that the increase in the UK is forecast to be less than during the Great Recession in 2009.

It also said that the number of insolvencies will stay relatively high in 2021, but will decline one per cent against the total figure for 2020.

 

Source: channelweb