The UK Government insolvency statistics for Q4 2021 were released on 28th January 2022 and show an increase in corporate insolvencies across most industries in 2021 relative to 2020. Compared to Q3 2021, the number of corporate insolvencies increased by 19% and they were 51% higher compared to Q4 2020.
Overall, in 2021, we saw lower levels of corporate insolvencies compared to pre-pandemic numbers – though much of the increase came in Q3 and Q4, indicating an upward trend that may carry on into 2022. On 30th September 2021, some of the temporary Government measures either ended or were replaced by new tapering measures. The percentage of government contribution to employee wages through the Coronavirus Job Retention Scheme (furlough) decreased from 1st July 2021, with the scheme ending on 30th September 2021.
In the final quarter of 2021, the restructuring experts Begbies Traynor reported that 589,168 UK businesses were suffering significant financial distress, a 5% rise on the previous three months. Financially distressed companies are an indicator of future insolvencies now COVID support has been withdrawn. It has also been noted that there was a 106% rise in County Court Judgements (CCJs), a key early sign of future insolvencies as creditors are now actively using courts to recover debts.
For the past two years, Credit insurers had been expecting corporate insolvencies and claims to be higher than they have been and whilst claims are expected to increase during 2022 and 2023, these are now expected to be at manageable levels. Because of the lower levels of insolvencies and claims, the market has built up reserves and capacity and therefore, insurers are able to support companies looking to use Credit insurance to aid and secure growth – whether in the UK or export markets. Despite the forecasted increase in corporate insolvencies and claims over the next 24 months, premium rates are more competitive now than pre-pandemic levels and therefore, it is the best time to explore this cover and how it can support your business.
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