Domesday 2021: Up to a million businesses to go bust when furloughing ends as ICSM Credit warns of the economy’s ‘ticking time bomb’

There is a ticking time bomb in the British economy and it is set to explode later this year. In a report by the former prime minister Gordon Brown published this week an estimated 900,000 small businesses are at risk of going to wall when the furlough scheme ends.

The BBC reported:  “As support schemes like furlough and business loan programmes end, companies are at risk of insolvency, according to the Centre for Economic Performance (CEP) and the Alliance for Full Employment (AFFE).”

The CEP and AFFE are backed by Gordon Brown who has warned that many firms are in effect facing disaster once the Government’s support ends in April or May.

Act now

Ian Carrotte of ICSM Credit said the country was sleepwalking to a Domesday scenario as so many businesses were supported by the furlough scheme and had become used to the hand-outs.

“When those Government back loans end this spring and the furlough scheme is scrapped then up to a million firms are potentially insolvent,” he said. “I implore all businesses to look at their credit situation and overheads and act now to save youtr enterprise.”

Budget opportunity

Gordon Brown said: “If we are to save good small businesses that are innovative and forward looking but which, without help with their investment plans, are in danger of going under, the Budget must bring forward measures.”

Hospitality

Ian Carrotte noted that the Chancellor Rishi Sunak had announced grants for retail, hospitality and leisure businesses to keep afloat until spring, worth up to £9,000 per property.

He welcomed the new help as a good start but warned the money still wouldn't be enough to save many firms from collapse but said without opening up the economy after Easter then there would be a full scale recession for three successive quarters and millions out of work.

Bad debts

Ian Carrotte said: “This next two months is really the last chance of many firms getting paid outstanding invoices. We help members of ICSM to chase up unpaid bills – some dating from almost a year ago. Our debt collection department has pulled in more than a hundred thousand pounds for members since late last year. Applying pressure of debtors results in being paid because if you don’t and they go into administration this Easter you won’t get your money.”

^{Kelly Hooper, owner of beauty and wellness salon The Barn in Somerset}

Small businesses

The BBC reported on examples of firms struggling to survive including George Ktori who was still paying bills despite his restaurant closing its doors. Mr Ktori, who owns Yamas Meze and Tapas in Nottingham, employs ten staff, says his business is making 10% of the sales it had done prior to COVID-19, through takeaways and meal boxes.

He took out a Bounce Back loan, designed for small businesses, "but that's only gone so far," he said. He is now considering the larger, and pricier, Coronavirus Business Interruption Loan Scheme (CBILS) loan. Kelly Hooper, owner of beauty and wellness salon The Barn in Somerset, is making money through selling some products online, she said.

"It's hard," she told the BBC. "This month is really, really hard."Any longer and there's a chance we won't be able to survive, unless we go into further debt."

"The online business has been ok, it's allowed us to survive," she told the Today programme. "Where we struggle is we have a bricks and mortar place. We have rent, insurance, lease hire of machines, we have that base we have to pay out whether we are open or closed."

About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com