Insolvencies hit record low – business news 17 March 2021.

James Salmon, Operations Director.

Insolvencies hit record low, but once support ends firms will fail, Britons set for £50bn spending spree, tax claw back extension to boost small firms and more.

Support sees insolvencies hit a record low

Figures from the Insolvency Service show business insolvencies fell to a record low last month, with 686 recorded in February. This is down 1,348 from the same month in 2020. The record low has been attributed to restrictions on winding up orders, delays in courts and leniency from creditors, with these helping keep firms afloat despite ongoing pressure brought about by the pandemic.

Julie Palmer of Begbies Traynor has warned that insolvencies could surge as Government support for businesses and the wider economy is wound down. She said there will be a “marked increase” in the failure of zombie businesses, adding that there will also be firms “which find it difficult to kick-start themselves”.

Margaret Carter of Azets has urged companies to prepare for pressure on their cash flow, telling management teams “who may have become complacent due to ongoing government support”, that “now is the time to review their plans and forecasts to see if they can survive the staged withdrawal of assistance and restrictions”.

Traynor: End of support will see firms fail

Ric Traynor, one of the founders of Begbies Traynor, says that the end of coronavirus-related support measures later this year could see a number of businesses fail, with a raft of liquidations and restructurings likely to follow when support packages like the furlough scheme are wound down.

With the number of insolvencies falling by around 35% in 2020, Mr Traynor says Government support schemes have artificially kept businesses afloat. He told City AM: “Those businesses that have been protected and still have fundamental problems are going to face formal insolvency, and that’s why we expect the number of insolvencies to increase over the course of the next year or two”.

“Also, businesses that went into the pandemic relatively unscathed, but have had a year of no business and continue to accrue liability like rent, all that will need sorting out.

“That can happen at the same time as the economy bounces back – there are five million companies in the UK, so you could have most of them growing strongly, and the ones we deal with, the ones that require some formal assistance, either ending or restructuring to reduce their level of debt.”

Britons set for £50bn spending spree

A report from the Centre for Economics and Business Research (CEBR) and Isa provider Scottish Friendly suggests Britons will go on a £50bn spending spree once restrictions are lifted, spending money saved over the past year. The analysis says households intend to take more holidays and eat out more, with a quarter of the £192bn in savings accumulated amid the lockdown expected to be spent. While Scottish Friendly and the CEBR estimate that 26% of the savings would be spent, a recent Bank of England report suggested that 5% of the £125bn of excess savings generated between March and November 2020 would be spent.


Thousands of small business owners who have lost money during the coronavirus crisis can claim more than £1bn in tax rebates to help mitigate losses, with ministers having announced an emergency extension to “loss carry back” rules. Previously losses could only be carried back one year to offset historical tax bills but the new measures enable firms to claw back profit and income taxes paid in the past three years. More than 130,000 incorporated businesses and more than 500 sole traders or partnerships should benefit. Chris Etherington of RSM says it is “important for self-employed workers not to overlook” the extension of the relief, which could prove to be very valuable.

Audit reform to make directors accountable for failings

Reform of audit rules set to be published by Business Secretary Kwasi Kwarteng will see senior executives held responsible for accounting errors, with directors to be made accountable for the accuracy of their company’s financial statements. They will face fines and bans when failings occur. Under existing rules, it is company auditors rather than individual directors who are deemed responsible for the accuracy of financial statements. The overhaul comes in the wake of a number of accounting scandals which have prompted concern over weak internal controls, conflicts of interest and poor audit regulation. The reform will see the Financial Reporting Council replaced by the Audit, Reporting and Governance Authority, a regulator with increased powers that may be given oversight of the UK’s largest private companies as well as those listed on public markets. Other changes set to be rolled out include new rules for account ancy firms, with the Big Four set to be forced to split their audit and consultancy arms. The Mail’s Mark Shapland says that while Government action “stalled” under his predecessors, Mr Kwarteng has said audit reform is “one of his initial priorities”.

House prices climb 12% in a year

Analysis by Halifax shows that Bury St Edmunds in Suffolk and Banbury in Oxfordshire have seen the biggest house price rises during the pandemic, with average prices up by more than a third. The analysis, which is based on regions with at least 100 house sales between the beginning of March 2020 and the end of February 2021, shows that Bury St Edmunds has seen the biggest jump, with the average sale price up 37% from £267,217 to £367,421. Banbury has seen average house prices rise 36%, from £283,830 to £385,556m, while third-placed King’s Lynn saw values climb 28%. The report shows that the typical value of a home in Britain is up 12% over the past year, climbing from £285,428 to £320,457.

Savings rates hit record low

Analysis by shows that savings rates have fallen to record lows since the start of UK’s first lockdown, with the average easy access savings rate less than a third of what it was a year ago. The report says the typical easy access rate hit a record low of 0.16% at the start of March, falling from 0.56% on March 1, 2020. also found that there are 383 fewer deals on the market, including cash Isas, than there were last year, with 1,385 products.


Uber agreed to pay its drivers in the UK the “national living wage”, as well as offering holiday pay and pension contributions. The u-turn comes after they lost a court case last month, in which it argued its drivers were independent contractors and thus not entitled to many statutory employment benefits.  The UK is one of Uber’s biggest markets.

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