Press Release of the Day – 30th July
UK company insolvencies fall sharply – “fool’s paradise of pain postponed”
Ulas Akincilar, Head of Trading at the online trading platform, INFINOX, writes:
“Tsunami survivors talk of the tide going out and an eerie silence before the giant wave hits.
“There’s a danger the same thing is happening with the UK’s insolvency data.
“No-one should be fooled by the sharp fall in company insolvencies recorded in the first three months after Covid hit.
“A third fewer companies went to the wall in the second quarter of 2020 compared to the same time last year.
“But this is not proof of businesses’ resilience in the face of the pandemic. Instead it’s a fool’s paradise of pain postponed.
“The UK Government has deployed a vast arsenal of support measures to prop up businesses. It’s paying the salaries of more than nine million workers under the furlough scheme and urged tax authorities and creditors to go easy on companies unable to pay their debts.
“But this forbearance and largesse cannot last forever. The Government’s support is mitigating the pain but it is also swelling the ranks of Britain’s zombie companies which are dead from the neck up.
“In time these support measures will end and the true extent of the damage to British businesses will become apparent. Welcome though today’s benign numbers are, the markets are still struggling to price in when and where the wave will hit.”
– Ends –