New report reveals liquidation rate of businesses around the UK from the past year

Business Rescue Expert has analysed data from the past 12 months to reveal the Year of Lockdown report, which reveals the state of businesses, the liquidation rate and the sectors and regions most likely to undergo an insolvency event.

Since the beginning of the first lockdown, 11.2 million workers have been furloughed in the last 12 months which equates to 1 in 3 of the UK’s workforce.

There have been 8,205 company insolvencies from March 2020 to January 2021. Broken down by sector they were:


Sector
Number of insolvencies*
Construction1,634
Hospitality1,378
Retail1,355
Administrative & Support1,200
Manufacturing930
All others1,708

* (March 2020 – January 2021)

The construction industry has been hit the hardest, the halting of various building projects, both large and small scale, badly damaged the construction industry resulting in 1,634 construction company insolvencies.

The hospitality industry was hit the second hardest, with restaurants and bars being closed at short notice and for long periods, resulting in 1,378 insolvencies. 

The table below shows the number of businesses registered in each region, the total number of business insolvencies and the Corporate Insolvency Ratio for each.

REGIONActive Companies in 2020Total InsolvenciesCorporate Insolvency Ratio (per 10000 companies)
Yorkshire & Humber189,0001,6421 in 115
North West267,0002,1301 in 125
North East71,0004261 in 167
West Midlands222,0001,2851 in 173
London531,0002,8741 in 185
East Midlands184,0007371 in 249
East of England271,0001,0161 in 267
Scotland178,0006491 in 274
South West236,0007821 in 301
South East418,0001,3081 in 319
Wales106,0002771 in 382
Northern Ireland75,0001481 in 506

The figures show that a business in the Yorkshire and Humber region of England was statistically most likely to undergo an insolvency event than in any other region (1 in 115) while a company based in Northern Ireland would be least likely (1 in 506). 

Additionally, businesses in the North East, North West and West Midlands of England along with London were at greater risk compared to the national average (1 in 207) while Scotland, Wales and every other English region was less likely than the average.

The total number of corporate insolvencies actually fell in 2020, to their lowest recorded levels since 2007. The main reasons are the Government-backed Covid-19 support measures, such as CJRS, BBL and SEISS, the reduced HMRC enforcement activity, the temporary suspension of creditor recovery methods, moratoriums and other insolvency tools launching and the advice from financial service regulators that businesses in financial difficulty should be treated with “forbearance and due consideration”.

Chris Horner, Insolvency Director with Business Rescue Expert said: 

“Ominously, even with restrictions being lifted and economic activity rising, 2021 will be a worse year for insolvencies in several industries than the year of lockdowns was. Government support in the form of backed loans, furloughs and the temporary ban on winding-up petitions and other creditors actions are all expected to end sometime in 2021. 

“Bounce Back Loan repayments and others will begin to come due, businesses will have to decide if they can re-employ or redeploy their furloughed workers and creditors that have been under severe financial pressure themselves will finally have the ability to look for repayments that might be critical to their own survival.”

Author: Editorial Team

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