{"id":12554,"date":"2020-09-14T09:58:30","date_gmt":"2020-09-14T09:58:30","guid":{"rendered":"https:\/\/www.openbusinesscouncil.org\/?p=12554"},"modified":"2022-05-04T21:37:54","modified_gmt":"2022-05-04T21:37:54","slug":"covid-19-causes-business-debt-to-drop-by-189-million","status":"publish","type":"post","link":"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/","title":{"rendered":"Covid-19 Causes Business Debt To Drop By \u00a0\u00a3189 Million"},"content":{"rendered":"
\"\"
Covid-19 Causes Business Debt To Drop By \u00a0\u00a3189 Million<\/figcaption><\/figure>\n

\u00b7 Total level of insolvent business debt drops by \u00a3189million during last quarter\u00a0<\/strong><\/p>\n

\u00b7 Decline in debt is due to a reaction to the pandemic including the Government\u2019s financial support<\/strong><\/p>\n

\u00b7 Drop in total debt will be short-lived, with the retail sector showing 12.6% growth in insolvent debt\u00a0\u00a0<\/strong><\/p>\n

The impact of COVID-19 has seen a sharp drop of \u00a3189 million in insolvent business debt during the last quarter, according to corporate distress data analysts Red Flag Alert.<\/p>\n

The firm\u2019s \u2018Write Off Report\u2019 shows that total levels of insolvent business debt at 30th<\/sup>\u00a0June 2020 were \u00a31.577billion, down 10.7% from \u00a31.766bn at the end of March. The decline has been due to the Government\u2019s COVID-19 support measures, creditors flexing payment terms and less formal action being taken against companies in serious financial distress.<\/p>\n

The quarterly figures are in complete contrast to trends this time last year, which saw total insolvent debt grow by \u00a3161m from April to June 2019.<\/p>\n

Analysts predict the recent downward trend<\/a> to be short-lived and point to retail sector debt as a barometer for what the future holds.<\/p>\n

Mark Halstead, a partner at Red Flag Alert, explains: \u201cTotal insolvent debt has declined because struggling companies have been able to draw on financial support from the Government and provided with more breathing space by businesses they owe money to. This has created a reverse-effect for total debt. In contrast, insolvent debt in retail has grown by around \u00a36million, which seems like a much lower number in comparison, but actually represents a 12.6% increase during the last quarter.\u00a0<\/em><\/p>\n

\u201cThis growth is important because retail performance is an early indicator of levels of consumer confidence and economic volatility. It\u2019s a sector that accounts for high levels of employment and affects the performance of many other industries such as logistics and manufacturing. Both of these have also seen varying rises in written off debt during the last quarter and we can expect more sectors to follow suite in the coming months.\u201d<\/em><\/p>\n

Red Flag Alert\u2019s Write Off data shows insolvent debt in the manufacturing sector grew by 17.4% from \u00a389.6m to \u00a3105.2m, while logistics saw a marginal increase of 0.84%, taking debt levels to \u00a362.3m at the end of June.<\/p>\n

Other sectors that saw rises in insolvent debt include hotels and accommodation, where levels more than doubled to \u00a312.4m, while travel and tourism witnessed a 79% spike in write offs, with insolvent debt growing from \u00a35m to \u00a39.1m during the past quarter.<\/p>\n

Mark Halstead adds: \u201cThese figures are much more extreme, but this is due to very low base levels of existing insolvent debt in each of these closely aligned industries. The key concern here is that these sectors are showing limited signs of recovery from the pandemic, with the end of the prime summer season very close. We can expect this to lead to high levels of business failures and payment defaults during the next six months.\u201d<\/em><\/p>\n

The construction and property sectors account for some of the UK\u2019s highest levels of insolvent debt, with total amounts standing at around \u00a3371million at the end of June, representing a 2.2% rise during the past quarter.<\/p>\n

Mark Halstead concludes: \u201cOur financial modelling since we started records in 2004 shows that the construction and property sectors typically operate with some of the highest levels of insolvent debt. The impact of the pandemic hasn\u2019t yet been that pronounced on these sectors and the biggest risk they are now facing is uncertainty around office-based working caused by the pandemic. If home working trends cause a significant long-term dip in demand for commercial property, it could burst this debt bubble.\u00a0<\/em><\/p>\n

\u201cThis quarter\u2019s Write Off figures have been skewed by the COVID-19 measures introduced by Government and positive steps quickly taken by companies during lockdown. We\u2019re now coming to the end of Government support and can expect businesses to enter a more protectionist mode as they fight for survival. With this in mind, it\u2019s likely that insolvent debt will see a sharp upwards trajectory over the next six months.\u201d<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00b7 Total level of insolvent business debt drops by \u00a3189million during last quarter\u00a0 \u00b7 Decline in debt is due to a reaction to the pandemic including the Government\u2019s financial support \u00b7 Drop in total debt will be short-lived, with the retail sector showing 12.6% growth in insolvent debt\u00a0\u00a0 The impact of COVID-19 has seen a […]<\/p>\n","protected":false},"author":7,"featured_media":12555,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":""},"categories":[3585,3666],"tags":[3468,3711,13949,3993],"acf":[],"yoast_head":"\nCovid-19 Causes Business Debt To Drop By \u00a0\u00a3189 Million - OpenBusinessCouncil Directory<\/title>\n<meta name=\"description\" content=\"The impact of COVID-19 has seen a sharp drop of \u00a3189 million in insolvent business debt during the last quarter\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Covid-19 Causes Business Debt To Drop By \u00a0\u00a3189 Million\" \/>\n<meta property=\"og:description\" content=\"The impact of COVID-19 has seen a sharp drop of \u00a3189 million in insolvent business debt during the last quarter\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/\" \/>\n<meta property=\"og:site_name\" content=\"OpenBusinessCouncil Directory\" \/>\n<meta property=\"article:published_time\" content=\"2020-09-14T09:58:30+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-05-04T21:37:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.footballthink.com\/wp-content\/uploads\/2020\/09\/Covid-19-Causes-Business-Debt-To-Drop-By-\u00a3189-Million.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"878\" \/>\n\t<meta property=\"og:image:height\" content=\"527\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Hernaldo Turrillo\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hernaldo Turrillo\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/\"},\"author\":{\"name\":\"Hernaldo Turrillo\",\"@id\":\"https:\/\/www.footballthink.com\/#\/schema\/person\/b9610afd0759dc701187a7f622375c23\"},\"headline\":\"Covid-19 Causes Business Debt To Drop By \u00a0\u00a3189 Million\",\"datePublished\":\"2020-09-14T09:58:30+00:00\",\"dateModified\":\"2022-05-04T21:37:54+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/\"},\"wordCount\":689,\"publisher\":{\"@id\":\"https:\/\/www.footballthink.com\/#organization\"},\"keywords\":[\"business\",\"business resources\",\"COVID-19\",\"SMEs\"],\"articleSection\":[\"Business Resources\",\"Entrepreneurship\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/\",\"url\":\"https:\/\/www.footballthink.com\/covid-19-causes-business-debt-to-drop-by-189-million\/\",\"name\":\"Covid-19 Causes Business Debt To Drop By \u00a0\u00a3189 Million - 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