With many of the government support schemes that were offered to businesses during COVID-19 coming to an end, recent figures have forecasted a looming ‘insolvency tsunami’. With the number of registered company insolvencies hitting 2,114 in March and only dropping slightly to 1,991 in April – more than double the figures for equivalent months from 2021 – this wave of liquidations has shown to be gaining pace across the whole of the UK’s business world. Of all the types of business closure procedures, the number of creditors’ voluntary liquidations (CVLs) has soared the most, all the way up to 1,777 last month, a 118% and 74% increase compared to April of 2021 and 2019 respectively. With taxes and inflation on the rise, as well as the crisis in Ukraine straining the UK economy, it seems as though businesses are constantly weathering one storm just to be faced with another one on the other side. It appears that the boom many were hoping for when pandemic restrictions ended simply hasn’t happened, as the UK has seemingly moved from one load of economic stressors to the next, with no much-needed respite in between.
Will this trend continue and what does it mean?
Unfortunately, despite the number of insolvencies dropping slightly in April compared to the month prior, the general trend for business closures still points upwards, up not just from last year but also from its pre-pandemic levels. With the current economic climate looking increasingly difficult to navigate, it is possible that many company directors simply lack confidence in their ability to trade at the moment, and so are looking to close down their business now in fear of being forced to do so in the future. Should this sentiment ring true for any directors, it’s crucial to not lose heart and seek expert advice as soon as possible.
The many challenges of the post-pandemic world
Despite many companies still feeling the effects of the pandemic, recent events continue to pile up and place further stress of the UK’s business world. Most urgent is the current cost-of-living crisis, with more and more workers demanding higher wages to keep up with rising costs, whilst the record drop in consumer confidence leaves many businesses with wanting sales, all while these businesses are feeling the direct impact of material shortages on their own operations. Continuing supply-chain issues, the ongoing war in Ukraine and rising inflation all points towards turbulent times ahead, with the Bank of England predicting an all-but-inevitable recession. Even typically well-performing businesses are being challenged by all the obstacles that need to be overcome at the moment, and in times like these, it is crucial to keep a constant eye on your company’s wellbeing and enlist the help of a licensed insolvency practitioner as soon as you feel that your business might be struggling.
If you would like to know more about your business’ health and what an insolvency practitioner can do to help you through these tough times, contact Voscap at 020 7769 6831 or email email@example.com to speak to one of our business recovery specialists.