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UK company insolvencies forecast to rise by 10% this year

Posted: 26th November 2019   In: Debt Collection Services

Company insolvencies in the UK are forecast to show a rise of 10% over the course of 2019, the highest increase across all advanced markets.

The Insolvency Outlook report by the trade credit insurer, Atradius, says the continuing Brexit uncertainty is one of the main factors for the increase as it delays any recovery of sterling, keeps inflation elevated and prolongs the drag on business investment.

The report says 2020 is forecast to be another difficult year with a 5% insolvency increase, based on a scenario where Article 50 is extended with a smooth transition.

However, the prospects of a no-deal Brexit or further delay to Brexit followed by a general election are likely to put further upward pressure on failure rates.

Atradius says global insolvencies are also rising for the first time in a decade. It forecasts business failure rates in developed markets will increase by 2.8% this year – the first rise since the global financial crisis.

The rise is largely driven by the loss of momentum in the global economy with growth forecast to slow from 3.2% last year down to 2.6%.

Across Western Europe, business failures are forecast by Atradius to increase by 2.7% this year and 0.7% in 2020. Slowing economic growth, the escalation of the US-China trade war and looming uncertainty surrounding Brexit and Italian politics are the key drivers of the upswing.

The gloomy outlook reaffirms the need for businesses to keep a tight rein on credit control and ensure invoices are paid promptly. Failure to chase up debts as they occur can lead to severe cash flow problems that can put even the most successful business under pressure.

That pressure can become overwhelming if the debtor subsequently becomes insolvent and the invoices remain unpaid.

A letter from a solicitor is often enough to ensure payment as it shows that you are taking the matter seriously. If that isn’t successful, there are several other options up to and including court action to ensure debts are settled.

Please contact Neil O'Callaghan if you would like advice about debt collection and credit control.

Posted by: Neil O'Callaghan
Dispute Resolution
Luton Office