Photo by The Guardian of the Northern Rock bank run in 2007
ICSM Business News: recession or no recession - concerns mount with the highest level of insolvencies since the Credit Crunch when a run on the Northern Rock Bank heralded an economic nightmare
By Harry Mottram: Earlier this year experts ruled out the chance of the UK falling into a recession this year predicting that economic growth would prevent successive quarters of negative figures. The Government’s Office for Budget Responsibility (OBR) confidently predicted the UK’s economy although underperforming compared to similar countries was far from a slump. That was continuing high inflation figures spooked the markets, economists and the Chancellor of the Exchequer Jeremy Hunt. The OBR said the economy could still shrink this year while the Chancellor said he was ‘comfortable’ if there is a recession caused in part by a further hiking of interest rates. This was in contrast to Jeremy Hunt’s statements in March that said inflation would ‘plummet’.
The Bank of England is widely expected to raise interest rates to a possible 5.5% in the battle to bring inflation down – the Government’s number one priority. With double digit inflation – food inflation even higher – despite an overall fall last month to under 10% - the hike in household and business bills whether its energy prices, shopping basket prices or fuel costs – has had a deadening effect on spending in most sectors. It’s the main reason why there has been a rethink on the possibility of a recession with some suggesting there could be one in 2024 instead.
The upshot of a combination of factors is a rise in business insolvencies. ICSM’s Ian Carrotte signalled his fears that the figures are now as high as the Credit Crunch of 2007 to 2009 when huge numbers of companies went to the wall. He said the ICSM business intelligence group had seen a rise in insolvencies through first hand accounts of the customers of members. “Members of ICSM have reported a rise in late payers – basically invoices not being paid on time or excuses as to why they can’t pay – it’s the first sign of trouble,” he said, “the figures by the UK Insolvency Service reveal there were 22,109 underlying corporate insolvencies in 2022, an increase of 57% from 2021’s statistics.
“Company directors need to act earlier when their business has a cash flow problem or have suffered a bad debt that can sink them. It’s also important for them to be given more time to seek a solution to an potential insolvency. If there is good faith most suppliers will be patient if they believe a firm can trade its way out of trouble. If the worst happens though ICSM is here to secure unpaid invoices and to collect debts owed.”
Business Desk reported that: “One in 202 active companies, at a rate of 49.5 per 10,000 active companies, entered insolvent liquidation in 2022. To add to the bleak outlook for UK businesses, the last 12 months have seen Creditors Voluntary Liquidations reaching their highest level in 62 years.”
In September 2007 queues began to form outside branches of Northern Rock and the financial horrors of the Credit Crunch began leading to a recession. The collapse of Silicon Valley Bank and Credit Suisse threaten a melt down of the international banking system this year but that danger has been averted for now. What is really troubling in the UK said Ian Carrotte, is the slowdown in the economy and levels of debt left plus inflation. He said: “Recession or no recession the levels of insolvency are having a crippling effect on the economy.”
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ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com
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
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk