Begbies Traynor has revised up its earnings expectations following a year of growth at the professional services firm that saw it make four acquisitions.
BoE does not expect wave of bankruptcies when Covid support measures end
The BoE is not expecting a wave of bankruptcies when coronavirus support ends.
A tide of bankruptcies among UK firms is not expected when the government pulls its emergency Covid support measures like the furlough scheme later this year, BoE Chief Economist Andy Haldane has said.
Many debts racked up recently by companies are spread over long durations “which increases the chances of them being able to be paid back and therefore bankruptcy is not picking up very much from current relatively subdued levels,” Haldane said.
“But ultimately there are risks around that and we’ll need to track them through,” he said in a presentation to businesses, a day after the BoE sharply raised its forecasts for British economic growth in 2021.
Insolvencies fell to two-year low in February
The number of company insolvencies fell to a two-year low last month, as companies were artificially buoyed by coronavirus support packages.
The number of company insolvencies last month stood at 686, the lowest monthly number recorded since January 2019.
Figures released by the government’s Insolvency Service found the number of company insolvencies in February 2021 was 49 per cent lower than the same month in the previous year.
February 2020 marked the month before the UK entered its first national lockdown, and government coronavirus support schemes, like the furlough scheme, were yet to be implemented.
Since March 2020, the overall number of registered company insolvencies in each month has been lower than the corresponding month of the previous year in 10 out of 11 months.
City A.M. in an exclusive interview.
In September, he says, when government support schemes wind down, there will be a spike in insolvencies, likely making up for 2020’s shortfall – and then some.
Traynor argues Covid support schemes have artificially kept businesses afloat that otherwise would not have survived the year.
The ones enjoying a stay of execution, along with others that picked up bad credit throughout the pandemic, would likely fail when support comes to an end.
“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,” he says.