Michael Ejercito
2024-03-18 17:20:33 UTC
https://www.reddit.com/r/LockdownSkepticism/comments/1bhrecg/death_by_a_thousand_cuts_uk_insolvencies_soar_17/
‘Death by a thousand cuts’: UK insolvencies soar 17 per cent and exceed
pandemic levels
BY:JACK MENDEL
The Insolvency Service said the numbers of compulsory liquidations,
CVLs, and administrations were also higher than in February 2023.
Fresh insolvency figures painted a grim picture this morning, with a
number of companies going bust soaring by 17 per cent last month
compared to 2023.
The Insolvency Service said 2,102 companies went bust last month which
was a 17 per cent rise on the same period last year, which was at 1,801.
The government agency said this was higher than levels seen during the
pandemic “while the government support measures were in place”, with
things like the furlough scheme. It is also higher than pre-pandemic
figures.
Analysts blamed a mixture of high inflation and the sharp increase in
interest rates following the mini-budget, which increased costs of
borrowing, and encouraged Brits to tighten their purses.
The war in Ukraine, which Russia launched two years ago, has also placed
huge pressure on businesses’ energy costs and ability to pay rent.
It said this included 217 compulsory liquidations, 1,707 creditors’
voluntary liquidations (CVLs), 166 administrations and 12 company
voluntary arrangements (CVAs).
The Insolvency Service said the numbers of compulsory liquidations,
CVLs, and administrations were also higher than in February 2023.
It also said that the number of insolvencies in February 2024 was
10,136, around 23 per cent higher than last year.
This comes as the UK entered a brief recession last month, but there are
already signs it had exited that period. This week it was reported the
UK took its first steps out of recession after the economy returned to
growth in January.
At the end of last month, S&P’s closely watched purchasing managers’
index (PMI), also showed the UK economy made a stronger start to 2024
than major European economies.
Yet, many businesses have struggled with higher interest rates, which
have been on hold for some months now.
Millions of Brits are eagerly anticipating their fall, which is
anticipated later this year, but some in the Bank of England’s
decision-making MPC committee have been more hawkish. This week it was
reported that interest rate cuts are drawing ever nearer after new data
showed that slack continued to build in the labour market.
READ MORE
Why the Bank of England will keep interest rates on hold despite lower
inflation
Although almost every measure suggested a softer labour market than
expected, the downside surprises were small, which demonstrated the
labour market was still tight in historical terms.
Julie Palmer, a partner at Begbies Traynor, said the latest data “paints
an unhappy picture for the state of the UK economy”.
“This environment is putting a huge amount of pressure on businesses and
the challenge business leaders now face will be insurmountable for many. “
Julie Palmer,
“After a decade of interest rates floating around zero, many businesses
simply were not prepared for higher interest rates for a sustained
period of time, having loaded up on cheap debt during the boom years,”
Palmer said.
“Sadly, the debt storm has now broken and this morning’s data from the
Insolvency Service highlights how this macro-economic environment is
wreaking havoc on small and medium businesses across the country.”
She added that the latest figures would discourage business owners who
had hoped interest rates might come down soon.
Daniel Staunton, a senior associate in the restructuring & insolvency
team at Kingsley Napley, warned that “the facts don’t lie”.
Staunton said: “When you speak to other professionals operating in the
restructuring and insolvency field they all report being busier which is
reflected in the increased numbers.
“We can likely expect March 2024 stats to show another incremental
increase.”
READ MORE
Pound Sterling makes strong start to 2024 as UK recovery from recession
to continue
He predicted that while “new records continue to be broken” he feared it
would “be an ongoing trend and whilst we won’t see tsunami levels, the
total number of insolvencies this year will ebb and flow like the tide.”
Nicky Fisher, president at R3 warned that “businesses are still
suffering the after-effects of last year’s economic turbulence”.
“Rising fuel, energy and funding costs and cautious consumer spending
are continuing to take their toll on bottom lines and make it harder for
businesses to break even,” Fisher added.
“After the pandemic era lockdowns; Brexit; staff shortages – and rising
wage costs; spiralling fuel costs; high interest rates and inflation
eroding consumers spending power and confidence; and the contraction in
income implied by falling GDP , it is sad but unsurprising that company
insolvencies have increased.”
Jeremy Whiteson,
“While there is still some optimism among firms about what the next year
has in store, the economic conditions remain a key area of concern for
many and unless things improve, we could see more and more firms turning
to an insolvency process to help resolve their financial issues. “
Meanwhile, Jeremy Whiteson, restructuring and insolvency partner at city
law firm, Fladgate warned that company failures can “provoke wider
economic problems if that causes unemployment or lost production”.
Whiteson said: “Against this background, the increased figures are
worrying. There has been something of a ‘death by a thousand cuts’ for
many businesses”, citing the impact of the war in Ukraine, the aftermath
of Covid, Brexit changes and inflation.
‘Death by a thousand cuts’: UK insolvencies soar 17 per cent and exceed
pandemic levels
BY:JACK MENDEL
The Insolvency Service said the numbers of compulsory liquidations,
CVLs, and administrations were also higher than in February 2023.
Fresh insolvency figures painted a grim picture this morning, with a
number of companies going bust soaring by 17 per cent last month
compared to 2023.
The Insolvency Service said 2,102 companies went bust last month which
was a 17 per cent rise on the same period last year, which was at 1,801.
The government agency said this was higher than levels seen during the
pandemic “while the government support measures were in place”, with
things like the furlough scheme. It is also higher than pre-pandemic
figures.
Analysts blamed a mixture of high inflation and the sharp increase in
interest rates following the mini-budget, which increased costs of
borrowing, and encouraged Brits to tighten their purses.
The war in Ukraine, which Russia launched two years ago, has also placed
huge pressure on businesses’ energy costs and ability to pay rent.
It said this included 217 compulsory liquidations, 1,707 creditors’
voluntary liquidations (CVLs), 166 administrations and 12 company
voluntary arrangements (CVAs).
The Insolvency Service said the numbers of compulsory liquidations,
CVLs, and administrations were also higher than in February 2023.
It also said that the number of insolvencies in February 2024 was
10,136, around 23 per cent higher than last year.
This comes as the UK entered a brief recession last month, but there are
already signs it had exited that period. This week it was reported the
UK took its first steps out of recession after the economy returned to
growth in January.
At the end of last month, S&P’s closely watched purchasing managers’
index (PMI), also showed the UK economy made a stronger start to 2024
than major European economies.
Yet, many businesses have struggled with higher interest rates, which
have been on hold for some months now.
Millions of Brits are eagerly anticipating their fall, which is
anticipated later this year, but some in the Bank of England’s
decision-making MPC committee have been more hawkish. This week it was
reported that interest rate cuts are drawing ever nearer after new data
showed that slack continued to build in the labour market.
READ MORE
Why the Bank of England will keep interest rates on hold despite lower
inflation
Although almost every measure suggested a softer labour market than
expected, the downside surprises were small, which demonstrated the
labour market was still tight in historical terms.
Julie Palmer, a partner at Begbies Traynor, said the latest data “paints
an unhappy picture for the state of the UK economy”.
“This environment is putting a huge amount of pressure on businesses and
the challenge business leaders now face will be insurmountable for many. “
Julie Palmer,
“After a decade of interest rates floating around zero, many businesses
simply were not prepared for higher interest rates for a sustained
period of time, having loaded up on cheap debt during the boom years,”
Palmer said.
“Sadly, the debt storm has now broken and this morning’s data from the
Insolvency Service highlights how this macro-economic environment is
wreaking havoc on small and medium businesses across the country.”
She added that the latest figures would discourage business owners who
had hoped interest rates might come down soon.
Daniel Staunton, a senior associate in the restructuring & insolvency
team at Kingsley Napley, warned that “the facts don’t lie”.
Staunton said: “When you speak to other professionals operating in the
restructuring and insolvency field they all report being busier which is
reflected in the increased numbers.
“We can likely expect March 2024 stats to show another incremental
increase.”
READ MORE
Pound Sterling makes strong start to 2024 as UK recovery from recession
to continue
He predicted that while “new records continue to be broken” he feared it
would “be an ongoing trend and whilst we won’t see tsunami levels, the
total number of insolvencies this year will ebb and flow like the tide.”
Nicky Fisher, president at R3 warned that “businesses are still
suffering the after-effects of last year’s economic turbulence”.
“Rising fuel, energy and funding costs and cautious consumer spending
are continuing to take their toll on bottom lines and make it harder for
businesses to break even,” Fisher added.
“After the pandemic era lockdowns; Brexit; staff shortages – and rising
wage costs; spiralling fuel costs; high interest rates and inflation
eroding consumers spending power and confidence; and the contraction in
income implied by falling GDP , it is sad but unsurprising that company
insolvencies have increased.”
Jeremy Whiteson,
“While there is still some optimism among firms about what the next year
has in store, the economic conditions remain a key area of concern for
many and unless things improve, we could see more and more firms turning
to an insolvency process to help resolve their financial issues. “
Meanwhile, Jeremy Whiteson, restructuring and insolvency partner at city
law firm, Fladgate warned that company failures can “provoke wider
economic problems if that causes unemployment or lost production”.
Whiteson said: “Against this background, the increased figures are
worrying. There has been something of a ‘death by a thousand cuts’ for
many businesses”, citing the impact of the war in Ukraine, the aftermath
of Covid, Brexit changes and inflation.