Growing number of UK businesses face bankruptcy as lockdown slows

Photographer: Simon Dawson / Bloomberg

The number of UK listed companies at risk of insolvency has doubled as restrictions aimed at curbing the spread of the coronavirus continue to ravage the economy.

A record 35% of UK companies issued profit warnings last year, according to a report by consulting firm EY. There has also been an increase in the number of companies that have issued at least three profit warnings in a 12-month period, a sign of insolvency warning.

“Many UK companies have been walking on thin ice for months, with government backing backing them,” said Alan Hudson, UK and Ireland restructuring manager at EY. “While there is speculation these measures could be extended until the summer, the countdown has started and in weeks or months we will find out how many companies can keep their heads out of it. water.”

The UK is again under severe lockdown restrictions following a peak in coronavirus cases in December. The government has so far committed nearly 300 billion pounds ($ 411 billion) in emergency support to the economy, but now faces pressure to expand the leave scheme after figures showing unemployment reached its highest level since 2016.

Sixty-two UK companies have issued at least their third profit warning, double the total in 2019, according to the report. A total of 583 profit warnings were announced by UK listed companies in 2020, the highest number in 21 years of EY research and 15% more than the previous record set in 2001.

Retail has been one of the hardest hit areas, as store visits plunge, office workers stay at home, and the government advises consumers to avoid non-essential trips. Businesses with a good online presence and the ability to adapt quickly have performed better, EY said, for example by moving away from formal outfits to athleisure.

– With the help of Irene Garcia Perez