BusinessBusiness RecoveryInsolvency stats are head-scratchingly strange

Insolvency stats are head-scratchingly strange

Martin Williams attempts to explain why insolvency stats are muted - and why they could stay that way

AT AN Institute of Credit Management think tank meeting this week, it was clear that members representing insolvency practitioners, credit insurers and grass roots credit management are still scratching their heads over the relatively low insolvency numbers.

Historically, when the UK has pulled itself out of a recession, insolvencies have tended to rise.

During this particular credit crisis, insolvency stats were surprisingly suppressed, and in its aftermath, figures have continued to fall.

The mood among credit industry professionals seems to be one of cautious pessimism. Many still think that the number of business casualties will increase at some point, but I’m not too sure about this.

Due to a number of contributing factors, such as low interest rates, HMRC’s Time to Pay scheme, and worries about the economy holding back many businesses’ expansion plans, thus reducing the risk of over trading, maybe insolvency stats will remain muted.

If my last point is true, it may be good from a narrow insolvency stats perspective, but it won’t do much to help drive an economic recovery of any note.

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