COLUMN: Rise in corporate insolvencies predicted in 2016

Phil Meekin.
Phil Meekin.

Phil Meekin is head of marketing at Sheffield-based Wilson Field Ltd, which is a licensed business recovery and insolvency practitioner.

Here, he explains the reasons behind why economists are predicting an increase in corporate insolvencies over the next 12 months.

After months of positive economic indicators, a report by Euler Hermes Group - part of global insurers Allianz - is forecasting a five per cent increase in corporate insolvencies in the UK in 2016.

A number of factors are behind this prediction, including the strength of sterling and anticipated wage increases impacting on companies’ competitiveness.

It also takes account of the predicted slowing in down in economic growth, low inflation and the potential start of interest rate hikes.

And uncertainty surrounding the referendum on the European Union membership is unhelpful.

Bur another issue is the fact that there have been a significant number of new businesses created since 2012.

These businesses have a high mortality rate, with as many as 50 per cent of new start-ups failing within the first five years.

That can have a knock-on effect with other companies suffering bad debts.

But it is not all bad news.

Businesses which have already survived the recession are generally better prepared both financially and in terms of experience not just to weather such blips but to capitalise on opportunities.

Fir advice on business recovery visit www.wilsonfield.co.uk or ring the company’s advice line on 0800 901 2475.