Business Forecast – gloomy with outbreaks of insolvency

Despite the Treasury’s comparison of independent forecasts for the UK economy showing an overall upturn for January 2018, there appears to be a nasty outbreak of bad weather looming. Close on the heels of the reported financial woes of Toys R Us and House of Fraser comes the news of the fashion retailer New Look and now, massively, Carillion.

The fall-out from the credit crunch of 2008 saw some big names bow out, but did not bring the massive scale of insolvencies that many experts had predicted. Banks holding their nerve and public policy played a part in that, but current events suggest that the banks are not going to engage in the same level of “hand-holding” as they have done in the last decade.

The insolvency of any business is likely to result in job losses and financial risk to the businesses that traded immediately with the insolvent entity, but insolvencies on the scale of a business like Carillion will have a much larger knock-on effect, with the fall-out being felt much further down the supply chain and there is also the potential for collateral damage to sole traders and smaller businesses who offer support services to the employees of such large businesses.

The best solution for any trading entity concerned about its solvency is to grasp the nettle and seek early advice, in order to protect the business and its owners as far as possible.