Increased Business Insolvencies Expected

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As Brexit is fast approaching, increased Business Insolvencies are expected.

According to Euler Hermes, insolvencies in the UK with rise by 8% in 2018 with importers and consumers affected by raising input costs and a weaker pound.

Where some countries should experience either a decline or stabilisation in the number of insolvencies thanks to the economic recovery and supportive monetary conditions. The UK is an exception in Western Europe.

In 2017, even with the recoil in growth, trade, services and more domestic sectors in the UK, the development in digital disruption and vast competition meant that business insolvencies increased by 21%.

Although the worldwide business insolvencies remained stable in 2017 due to a rebound in Asia and emerging markets such as Russia and Brazil, insolvencies are set to decrease globally by -1% in 2018.

However, even with this global decrease, in its annual Global Insolvencies Index, Euler Hermes forecasts insolvencies in 43 countries worldwide. The index shows that the number of bankruptcies remains higher than 2007 in one out of two countries.

Together with the UK, ranked as experiencing the highest increase in the number of business insolvencies worldwide for its fifth consecutive year is China. China will undergo the strongest insolvency increase in 2018 with the number of business failures to rise by 10%. Bankruptcies are expected to rise in Asia as the region suffers from the deceleration in China.

Ludovic Subran, Chief Economist at Euler Hermes said “All in all, insolvencies are stabilizing worldwide after seven years of decreases. This confirms the return of credit risk with the economic recovery. In 2018, companies in Asia, Latin America, Eastern Europe and the UK should be closely monitored. In addition, large bankruptcies are increasing fast as disruption in industries such as services and retail leaves no one unscathed. Mind the domino effect!”

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