The pandemic has caused substantial financial stress for many businesses around the UK, and even though restrictions have been lifted, businesses have still been struggling these recent months. Government support schemes are coming to an end which means it could get harder for businesses to stay afloat if they no longer have financial support.
The following are the statistics for Insolvency in Q3 2021:
- Corporate insolvencies totalled 3,765 in Q3, which is a 16.7% increase compared to Q2’s figures of 3,226
- Corporate insolvencies increased by 43.5% compared to Q3 2020’s figures of 2,624
- Individual insolvencies dropped by 1.8% to 26,758 in Q3 2021, compared to Q2’s figures of 27,252
- Individual insolvencies were also 32.5% higher than Q3 2020’s figures of 20,194.
The damage to the economy caused by the pandemic is becoming more apparent in the level of corporate insolvencies; however, the picture overall is quite varied when looking at the types of procedures that have been undertaken.
Q3 has seen the highest quarterly corporate insolvencies since the pandemic began. This was due to a large rise in Creditors Voluntary Liquidations, resulting in the highest quarterly total in 12 years.
On the other hand, administrations have remained somewhat similar to Q2, with a small drop in CVAs; both of which are much lower than 2020.
After trading for over 18 months during the pandemic, there has been a huge toll on businesses and a lot of directors may deem their company’s success unlikely. This will no doubt play a major part in the rise of Creditors Voluntary Liquidations.
Over the past three months, there has been a rise in energy prices, labour market and supply chain issues which has put on added stress for businesses and their owners.
There has been a considerable decline in consumer spending and confidence during Q3 as people have been worried about their financial situation and the future of the economy.
As we start entering the winter, company directors need to be conscious of signs of financial difficulty within their business. This could include cash flow issues, problems paying staff or suppliers and increasing stock levels. It is important for directors to seek advice as soon as possible when they identify an issue so that it can be tackled with the help of an insolvency practitioner.
A fall in Individual Voluntary Arrangements and bankruptcies has caused the quarterly reduction in personal insolvencies, however, they are much higher compared to a year ago. Debt Relief Orders have increased to the highest quarterly total since the start of the pandemic. This suggests that more people are seeking advice to manage their debts.
Although the Government initiatives like the furlough scheme have helped a large number of people, not everyone has been able to be helped, causing financial stress on many consumers.
The pandemic has led to many people saving their money and paying off debt; however, there are others who have had to borrow money or use their savings to pay their general living costs.
Do you know a business or business owner that is struggling financially? Then seeking insolvency advice is highly recommended. The earlier an insolvency practitioner is approached the more options there will be. Contact us here at Herron Fisher today on 020 8688 2100 for our Croydon office, or 01323 723643 for our Eastbourne office.