U-shaped, V-shaped recovery or Armageddon?
The Bank of England’s chief economist remains positive that the UK economy is on track for a quick recovery. Yet a growing number of companies, including household names, are announcing planned redundancies as part of a restructure. Many are considering an extensive insolvency process. So should we expect an economic bounce back or Armageddon?
Insolvency procedures are accelerating
A recent R3 survey finds that 93.7% of practitioners expect a higher number of insolvencies over the next 12 months. It seems inevitable that numbers will surge as soon as government support eases. Which means the Q3-Q4 period may well be a critical bellwether for 2021 as companies find themselves in new market conditions, with smaller working capital.
Things may not be so stark, however, as many companies have used this time to build trust with stakeholders. Plus the suspension of winding-up petitions and statutory demands has allowed debtors to renegotiate their contracts and terms of payments. And now, with the economic restart, it is about regaining stabilisation and innovation.
There is a risk that most UK businesses will end the year by taking a financial hit. What the companies will need to survive is a vision that can be turned into a long-term recovery plan and a strategy for growth.
If your business is in financial difficulty, don’t put it off. Contact us for a free chat on 0800 118 2948.
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