Despite the Covid19 pandemic and its devastating effect on sections of the economy, updated figures released today, 24 June 2021 show that there were 201,820 new company registrations between October – December 2020. This was an increase of almost 46,000 on the same pre-pandemic quarter in 2019. This means that at the end of December 2020, there were 4,320,862 companies on the register. However, despite the high number of new business starts, which appears to be positive news, the net increase was only 41,203. Why?
Unfortunately, the statistics also show an increase in the number of dissolutions to 161,837 in the same period. This is an increase of 40,212, up by 33.1%. This may not be as bleak as it sounds in that the process of dissolution (both compulsory and voluntary) was temporarily curtailed from 2 April 2020, curtailment coming to an end on 10 September 2020, with dissolutions being registered in a four week period. Hence the October numbers were distorted by the additional cases.
Despite this possible explanation, it is worrying that at the at the end of December 2020, a further 57,000 companies were in the process of dissolution. This figure is not included in the fourth quarter numbers. This is 28.7% higher than the number reported at the end of December 2019 and perhaps is indicative of the problems that may lie ahead in the coming months.
On a positive note, it seems that there are still individuals with sufficient confidence in both themselves and their business ideas to take the risk of starting a new business despite the ongoing economic uncertainties
It would also be interesting to know how many of these new companies have been incorporated by persons who may have been involved in the running of a company that may have entered a formal insolvency process over the past months. Hopefully, they will be successful in the months ahead and be in a position to take on new employees for the benefit of the UK generally.
It would be even more encouraging to see the restrictions that are so severely limiting so many business sectors being eased a little more, giving further opportunity to build profitability and safeguard employment for those seriously concerned about their own futures. This will always come with the caveat – provided it safe to do so.
Through these articles we have stressed the importance of seeking advice about the actions that can be taken to protect companies from administration or liquidation, especially if the business model is basically sound.
The Practitioners and other professional staff at TH Financial Recovery would be pleased to discuss these in a free confidential, no pressure and no obligation conversation, either by Zoom Videoconference, telephone or physical meeting if you are comfortable with the latter. Please call 01282 332222 or email info@thfr.co.uk for sympathetic and professional assistance.
Sources: Companies House