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Are historically low insolvency rates disguising the real financial health of mid-sized businesses?

4th May 2021   ·   The ThinCats Team   ·   Insights

We recently analysed insolvency rates across more than 400,000 mid-sized SMEs as part of assessing the impact of the Covid pandemic on UK businesses.

The chart shows that insolvency rates for mid-sized SMEs in 2020 were at historically low levels suggesting that government support programmes to protect businesses from the impacts of the Covid pandemic have been successful. At 0.61%, insolvency rates in 2020 were less than a third of the 1.86% peak set in 2009 during the global financial crisis.

 

The real question, though, is where will insolvency rates go from here? Sectors reliant on footfall are already showing signs of stress even before the benefits of the furlough, VAT deferrals and other cost saving support schemes start to unwind and businesses that have borrowed through CBILS or BBLS start making interest repayments.  

Read our full report An analysis of UK mid-sized SMEs : Where next for insolvency rates? to see which sectors are more resilient than others and the early warning signs we will be looking out for to gauge the speed and scale of any future rises in insolvency rates.

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