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Home / News and Insights / News / UK businesses face an increased risk of insolvency, says R3 study

At the start of 2017, UK businesses had reported a 33% risk of insolvency, compared to the end of 2017 which saw that figure increase to nearly 40%.

These figures were calculated by drawing together key performance indicators including balance sheets and records of the directors’ successful (or unsuccessful) directorship history.

The cause of the increased risk cannot be pinpointed on one specific event or issue, save that inflation and exchange rates, coupled with economic uncertainty (arguably made worse by ongoing Brexit negotiations) will certainly be influencing factors. Personal insolvency is also said to be at a 5 year high.

The historical debt financing that helped propel many high street stores, along with crippling interest rates on borrowing for smaller businesses, may mean that the risk continues to increase. With Brexit on the (seemingly still distant) horizon, business insolvency and recovery procedures could go either way. That being so, there should be less stigma on those who opt for rescue procedures if it means insolvency can be avoided, particularly with the UK economy being sensitive to the uncertain changes ahead; more businesses boosting the UK economy can improve our standing as we go it alone post Brexit.

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