MIXED FINANCIAL NEWS
There has been a mix of economic news in the last couple of weeks – some good and some not so.
The unemployment figures for May 2021, released on Tuesday, 15 June, show the number of payroll employees rose by 197,000 to 28.5 million, the sixth consecutive month of growth. The official unemployment rate for those over 16 is now 4.7%. The government also reports the number of job vacancies in March – May 2021 was 758,000, the number being just 27,000 below pre-pandemic levels.
The expansion of economic activity is also reflected in the monthly inflation figures. The rate of inflation has increased sharply in May, from 1.5% to 2.1%, this being reflected in the rising price of petrol / diesel, clothing and the cost of food and drink as the hospitality has been opening up. It would be welcome news if this was just the result of the improvement in the economy, but rising inflation could lead to increase in interest rates, a prospect that would have a negative effect on the cost of borrowing just as businesses are seeking to expand their activity again.
In addition, the government announcement that lifting of Covid19 restrictions has been delayed for a month has resulted in a whole series of warnings, particularly from the hospitality sector, that this could trigger the collapse of many companies who were depending on renewed activity to improve cash flow and profitability as they moved to a position where they operate “normally”. It waits to be seen what help government will give and if this will be sufficient for some. On the other hand, many also argue that a delay now will reduce the prospect of a further spike in Covid19 cases and the need for a more stringent restrictions or even lockdown in the coming months.
The difficulties face by businesses and individuals is also reflected in the monthly insolvency statistics released yesterday, 15 June 2021. These show that despite some of the good news referred to above, there were 1,011 company insolvencies registered in May, 7% higher than May 2020. This is still a relatively low number when compared with the 1,352 company insolvencies registered in May 2019. There were 31 compulsory liquidations, 89% lower than May 2019, this low number resulting in part from restrictions on legal action on the part of creditors. On the other hand, the number of voluntary liquidations grew to 930, 18% higher than 2020 and just 3% lower than May 2020. This may well be the result of directors / business owners taking a hard look at their financial position and coming to the conclusion that the level of debt built up over the last 18 months is unsustainable and will be very difficult, if not impossible, to continue trading.
If you are unsure as to options that may be open to you if you believe your business is insolvent, you should seek professional advice. Clients tell us the hardest thing to do is pick up a telephone, admit there is an issue and then ask for help. However, they also tell us the relief from stress and uncertainty can be so beneficial.
We would be pleased to discuss your concerns 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. At T H Financial we specialise in corporate recovery, business turnaround and insolvency, and are licensed to take formal insolvency appointments such as Administrations, including Pre Packs, Liquidations (CVL & MVL), as well as Company Voluntary Arrangements (CVAs) and Schemes of Arrangement. Please call us on 01282 332222 / 01772 641146 or email info@thfr.co.uk to sympathetic and confidential assistance.
Sources: Insolvency Service