Global insolvencies on the rise for first time in a decade, says report

Global insolvencies are rising for the first time in a decade, according to leading economists at trade credit insurer Atradius.

The Insolvency Outlook report also revealed that the greatest uptick in insolvencies was being seen in the UK.

The report forecasts business failure rates in developed markets will increase by 2.8% this year – the first rise since the global financial crisis.

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The rise is largely driven by the loss of momentum in the global economy with growth forecast to slow from 3.2% last year down to 2.6%.

The UK faces the highest insolvency increase across all advanced markets, forecast to rise as much as 10% in 2019.

The continuing Brexit uncertainty brings delay to any recovery of sterling, keeps inflation elevated and prolongs the drag on business investment.

2020 is forecast to be another difficult year with a 5% insolvency increase; based on a scenario where Article 50 is extended in October with a smooth transition.

However, the prospects of a no-deal Brexit or further delay to Brexit followed by a general election are likely to put further upward pressure on failure rates.

Stuart Ramsden, Head of Commercial for Atradius UK said: “The strain from a global economic slowdown, political uncertainty and trade tensions is evident, taking a toll on growth and contributing to the first global rise in insolvencies in a decade.

“However, businesses cannot be inhibited by this and if they want to achieve growth and must be prepared to face the challenges by protecting their business from any potential negative impact. A robust trade strategy is crucial with risks assessed and mitigated against in real time.

“Growth and opportunity are still there for the taking but only when hand-in-hand with caution and preparation.”

Tags : Atradiusinsolvency
Patrick Cremona

The author Patrick Cremona

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