Global insolvency rates forecast to rise in 2019 - Resolve Group UK

Global insolvency rates forecast to rise in 2019

Resolve Group UK

Global insolvency rates forecast to rise in 2019

A recent economic research report from the credit insurer Atradius forecasts that global insolvencies are set to grow in 2019 for the first time in 10 years.

The report further suggests that the greatest rise of 7% will be experienced in the UK, representing the highest increase of all advanced markets. The uncertainty caused by Brexit continues to affect business confidence and the recent extension of the deadline to secure a deal with the EU may serve to extend the economic lack of confidence still further. UK business investment has contracted over the past four quarters as organisations are reluctant to make long-term funding decisions until the economic landscape becomes more settled.

This has had a significant impact on supply chains with the construction sector being particularly badly affected. This industry is very much inter-connected in terms of suppliers, contractors and sub-contractors and so the impact of restricted cash flow which may cause late payments, and even insolvency, could be significant and its repercussions felt throughout the supply chain.

UK retail has also been hit with the demise of several well-established retail chains already during 2018, and the long-term fate of Debenhams remains to be seen. Consumer sentiment remains low and further casualties are anticipated.

Furthermore this forecast 7% rise in insolvencies in the UK was predicated on an orderly and timely Brexit, the date for which has now already been extended. There was a substantial increase in insolvencies of 10% in 2018 and this could now become even greater in 2019 based upon an even more extended period of uncertainty.

Atradius predict that 2019 will be the first year of increase in global insolvency levels since the financial crisis, after nearly a decade of annual improvements in the number of corporate insolvencies. The world economy is forecast to grow only 2.7% in 2019 and Atradius anticipates an increase of 1% in insolvencies for advanced markets – the first rise since 2009, marking the end of the recovery cycle. Western Europe as a whole is expected to be the worst performing global region with an average increase in insolvencies of 2%.

ReSolve recommends that professional advice should be sought to help manage financial problems or establish long term business plans. We believe that early action is the key to avoiding or surviving financial difficulties. The difference between those that survive and thrive and those that fail is how well they manage difficulties.

If any business is experiencing difficulties and would like to discuss options, without charge or obligation, please contact us.

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