Britain set to see surge in insolvencies

Britain’s businesses could be set for a tough 2018 as the nation is predicted to face the second highest rate of insolvency of any leading global economy, new research warns.

Only China is expected to see a greater rate of corporate insolvency than the UK in 2018, according to trade credit insurer Euler Hermes.

The rate of insolvency in the UK is set to surge by 8% this year, as the weakness of the pound and rising operational costs take their toll.

Furthermore, a predicted 2.3% decline in investment following Brexit is also likely to limit the ability of businesses to offset these pressures.

The increase in insolvencies could impact supply chains and result in more late payments or nonpayment of invoices. 

Euler Hermes UK and Ireland chief executive Milo Bogaerts has said the potential for interest rates to rise again could also cause further issues for small businesses.

On a European scale, levels of insolvency are expected to decline by 3% across the European Union, with a 7% fall in France leading the way.

Meanwhile, the total number of global insolvencies is forecast to decline by 1% in 2018, with the UK market going against the trend.

While the UK figure may appear high, it is important to note that insolvency levels in Britain have been historically low in recent years.

Turbulence in the market must therefore “be taken in context” according to Ludovic Subran, chief economist at Euler Hermes.

For those facing tougher times, entering into administration is now easier than ever and a court decision is not required to do so.

Alternatively, a business may undertake options reviews to decide on the best course of action, or use an independent business review to take an unbiased look at its strategy, forecasts and finances.

By Phil Smith


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