Record number of firms on the edge – business news 22 April 2021.

James Salmon, Operations Director.

Record number of firms on the edge, SMEs anxious about the future, Consumer prices edge up and lots more business stories that we have seen that might interest our members and visitors.

Record number of firms on the edge

The latest red flag alert from Begbies Traynor shows 93,000 more UK businesses weakened to the point of ‘significant financial distress’ in the quarter to the end of March meaning a total of 723,000 companies are at risk of going bust.

The increase represents a 42% jump – the largest rise reported since the research started in its current form in 2014.

Julie Palmer, a partner at Begbies Traynor, warned that yet more companies could slide into insolvency despite the easing of pandemic restrictions. “The dam of zombie businesses could be about to break,” she said. “However, our experience shows that unmanageable levels of debts and subsequent overtrading are likely to be the hidden icebergs waiting to sink even the highest-profile businesses.”

As the UK moves out of lockdown and back towards usual trading practices, many businesses will no longer be able to rely on government support schemes such as furlough to keep their businesses afloat.

While the BBLS played an instrumental role in keeping many resilient SMEs alive and acted as an important triage system to identify and support viable businesses that needed credit, it also exasperated the zombie status of weak businesses that continue to service their debt piles.

If we are to avoid compounding this cycle, we must focus on supporting sectors and businesses that are resilient and agile enough to adapt to the new economy. The introduction of a new recovery loan scheme (RLS) will provide the necessary catalyst many sectors need and its good to see the Government look beyond this triage phase and instead identify, prioritise and protect our most resilient individual business sectors and segments.

Insolvency and restructuring trade body R3 in Wales has warned that the economic damage caused by the pandemic is only now being reflected in levels of corporate insolvency – as Government figures show numbers are increasing.

The latest monthly insolvency statistics, which were recently published by the Insolvency Service, showed that corporate insolvencies in England and Wales increased in March 2021 to 992 – a 44.8% rise on February’s figure of 685.

Personal insolvency numbers increased to 10,941 in March 2021 – a 60.2% increase on February’s figure of 6,828, and were 40% higher in March 2021 than in March 2020 (7,815).

Philip Winterborne, chair of insolvency and restructuring trade body R3 in Wales said“The economic damage caused by the pandemic is starting to show in levels of insolvency, but Government support has postponed rather than prevented the true picture being shown in insolvency levels to date. Twelve months ago, the economy was struck by the pandemic – and it is likely to be a long road to recovery. The monthly rise in corporate insolvencies comes after 11 months of relatively low levels of company insolvency procedures, as the Government’s support has provided many businesses with a vital lifeline and removed many of the traditional prompts and triggers for seeking financial advice.

“As lockdown restrictions continue to unwind, there are reasons to be optimistic. Many businesses have adapted and reinvented themselves during the pandemic and may be in a better position for the coming months as a result.

“We may also see consumer spending increase, but companies need to be aware of the risks of over-trading if they don’t have the cashflow needed to cover the full costs of reopening and restocking. They need to plan for a sustainable reopening of their businesses.

“Unemployment is unsurprisingly higher than it was a year ago, and while many people have been able to save money during the pandemic, there are also a large number whose personal finances are precarious.

“The demand for workers in sectors gearing up for a return to pre-pandemic levels of work will offset some of the jobs lost in the companies worst-hit by Covid, but it will take some time for the economic and mental wellbeing of those who have been out of work to recover.”

“The Government’s recent decision to extend a number of its temporary insolvency measures provides a window for anyone whose finances have been affected by the pandemic to plan for the future and explore how they can improve their situation. We urge them to take it – and to start by seeking advice about their options from a qualified source.”

SMEs anxious about the future

A survey by SME-focused insurer Simply Business shows the rollout of coronavirus vaccines is boosting confidence among smaller firms with nearly two-thirds feeling more optimistic as a result. However, overall only 35% of SME owners overall feel optimistic about the future and just a quarter believe they will return to pre-pandemic levels by spring or summer 2022. Some 25% are unsure about whether they’ll be trading next year at all.

Consumer prices edge up

The latest ONS figures reveal that inflation in March was up to 0.7% from 0.4% a month earlier, driven by the increased cost of fuel, transport and clothes. However, the reading was lower than analysts expected. The Bank of England has forecast that inflation could reach 1.9% by the end of 2021, with other experts saying it will exceed 2% before the end of year.

Women more concerned over rise of machines

A report by PwC reveals that women fear automation more than men with 41% anxious about their prospects in the future compared with 29% of men. Overall, 29% of women and 45% of men felt positive about their prospects while 27% of BAME workers feared their jobs could be obsolete within five years, compared with 18% of white employees.

House Prices

UK House Prices soared in February at the highest growth rate recorded in more than six years – but London lagged behind the rest of the country. Average house prices across the UK increased 8.6 per cent in the year to February, up from eight per cent in January.


Over in the US,  Netflix results disappointed, reporting 4 million new subscribers , missing on the expected 6m.

Taylor Wimpey

Taylor Wimpey has said that the housing market remains healthy in 2021 after a surge in customer demand. Speaking in its trading update, Taylor Wimpey reported a net private sales rate for the year to 18 April of 1.00, compared to 0.90 in 2020. Its total order book value stood at around £2.81bn, a rise from the £2.66bn last year.

Rentokil Initial

Rentokil Initial revenue was up 15.4% for the first three months of the year, the majority of which was organic. According to the company’s trading update for the first quarter of 2021, hygiene delivered a 48.5% increase in ongoing revenue, supported by a revenue contribution of £75.5 million from one-time disinfection services, reducing, as anticipated, by approximately 25% on the high watermark level of £100 million in Q4 2020

Domino’s Pizza

Domino’s Pizza reported a ‘strong’ first quarter with sales in its delivery business more than offsetting the lower sales from its impacted collection business. UK & Ireland system sales were up 18.7% to £371m in the first quarter, largely unaffected by the impact of covid 19.

Optimism for German companies in UK improves

A survey by the German-British Chamber of Industry & Commerce has found confidence among German firms with operations in the UK has increased with 20% now planning to move business activities out of the UK due to Brexit – down from 70% last autumn. Director-general of the group, Ulrich Hoppe, said: “I think there is renewed interest in the UK market and also in terms of investment in the UK market, because it is an important market,” adding that clarity over the future relationship has provided much-needed certainty.

Labour calls for probe into PM’s text exchange with Dyson

Boris Johnson has come under fire for “fixing” a tax issue for Sir James Dyson who sought assurances his staff wouldn’t see their tax status changed if they returned to the UK to help with the national pandemic effort. Mr Johnson insisted he had done the right thing and that “any prime minister” would have done the same in the circumstances amid a concern over a shortage of ventilators. But Labour has said the text messages are part of a pattern of government “sleaze” and has called on the cross-party Liaison Committee of senior MPs to investigate “as soon as possible”.

One million self-employed workers are yet to file returns

As many as one million self-employed workers and investors have not filed taxes due in January, the Telegraph reports, with many expected to face a 5% rise in bills when they do eventually file returns because of a late payment surcharge. Some 270,000 people have been hit with the charge so far, on top of a £100 fine already issued for not filing by the end of February. Andy Chamberlain, of IPSE, a freelancer trade body, said although taxpayers should get their affairs in order and pay on time, HMRC should avoid “heaping further charges on those who are already struggling”. Jay Sanghrajka of Price Bailey added the number of people who had still not filed tax returns or settled bills was “shocking”, adding: “The longer they leave it the harder it will be to get their financial situation under control. They risk fines which will only compound their problems.” The Telegraph points out that UK workers now owe more than £65bn in tax, up 72% since the pandemic began.

£1.8m lost to pension scams in first quarter

Data from Action Fraud has found that savers lost £1.8m to pension fraud in the first three months of 2021. Action Fraud said there has been an increase in cases, with 107 reports of pension scams being received by the organisation in the first quarter. This represents an increase of nearly 45% in comparison to the first three months of 2020.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.