Alan Hudson, UK&I Turnaround and Restructuring Strategy Leader and EY-Parthenon Partner, comments on UK insolvencies in response to the Spending Review: “The falling UK insolvency numbers referenced by the Chancellor in his Spending Review don’t actually reveal a great deal about the health of UK businesses nor the complex challenges they face.
“The total number of company insolvencies in Q3 2020 fell by 9% compared with Q2 2020, which on the face of things may suggest formidable resilience by businesses but, it does not present the full extent of the situation. Instead, these figures reflect the inevitable impact of the alteration or suspension of the statutory insolvency framework during the pandemic, and they don’t reveal how many businesses only continue to operate due to the life support provided by government measures. While it’s true that the government’s policies have helped keep insolvency numbers down during the pandemic, the business community still faces significant challenges.
“While hopes of an effective vaccine are edging closer towards reality, government support for business is winding down and the country is facing, in the words of the Chancellor “an economic emergency”. As such, the outlook for UK businesses remains extremely challenging, particularly with the additional lockdown restrictions in place ahead of Christmas.
“As the New Year draws nearer with many business leaders likely to be looking forward to a fresh start in 2021, companies must be agile, adapt and explore how they might reshape their results in order to ensure a long-term future.”