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Growing number of UK firms face bankruptcy as lockdown drags

The UK is again beneath extreme lockdown restrictions following a spike in coronavirus instances in December.

Bloomberg

PUBLISHED ON JAN 31, 2021 06:05 AM IST

The variety of UK listed corporations vulnerable to insolvency has doubled as restrictions aimed toward curbing the unfold of the coronavirus proceed to ravage the economic system.

A file 35% of UK corporations issued revenue warnings final yr, in response to a report by the consulting agency EY. There was additionally a surge within the variety of corporations issuing three or extra revenue warnings in a 12-month interval, a warning signal for insolvency.

“Many U.Okay. companies have been treading on skinny ice for months, with authorities help propping them up,” mentioned Alan Hudson, restructuring chief for U.Okay. & Eire at EY. “Whereas there may be hypothesis these measures could possibly be prolonged till the summer time, the countdown has began, and in weeks or months we’ll learn the way many corporations can hold their head above water.”

The UK is again beneath extreme lockdown restrictions following a spike in coronavirus instances in December. The federal government has thus far dedicated virtually 300 billion kilos ($411 billion) in emergency help for the economic system however now faces stress to increase the furlough scheme after figures exhibiting unemployment rising to the best since 2016.

Sixty-two UK corporations issued at the least their third revenue warning, double the overall in 2019, in response to the report. A complete of 583 revenue warnings have been introduced by UK-listed corporations in 2020, the best quantity in 21 years of EY analysis and 15% greater than the earlier file set in 2001.

Retail has been one of many hardest-hit sectors, as visits to retailers plunge with workplace staff staying residence and the federal government advising shoppers to keep away from non-essential journeys. Firms with a great on-line presence and the power to adapt shortly have carried out higher, EY mentioned, for instance by shifting away from formal put on to athleisure.

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