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Insolvencies “rocketing”


I suppose credit managers will often be seen as harbingers of gloom, constantly berating businesses about the need to be careful with credit. But when you see figures such as these, the message has to be clear. It still astonishes me that businesses let their assets walk out of the door without even a cursory check.

Business insolvencies were up 9% on the previous year and the sectors most affected were, as expected, retail, construction and hospitality. Perhaps the most interesting stat was that London was particularly severely affected. Up 21%. The general view is that the capital has been relatively lightly affected by the downturn up until now. Why that is I am not sure but maybe the drop in interest rates were a greater boost to spending power in a part of the country where mortgage payments take up a substantial chunk of income. And maybe that effect has begun to wear off. Just a theory of mine perhaps but with all credit assessment, its valuable to look at the bigger picture.

Unfortunately its difficult to see improvement in the short term and maybe even in the medium term. The process from a downturn to actual insolvency is often longer than imagined and my feeling is that the worst is yet to come

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