Businesses ‘hanging on by the nails’ as Covid loans mature
Companies hang on to end of support
Retailers, pubs and restaurants in particular were hoping that a full-blown Christmas spending boom – spurred on by families and friends desperate to make up for lost time last year – would restore their fortunes and eat away at the mountain of debts.
But the economy is not yet fully recovered, omicron has trashed Christmas plans and support is already withdrawn, meaning businesses risk having to shoulder this burden with little additional help.
The leave is over. Businesses like Slaney’s are already making loan repayments, and others will begin soon at the end of their grace year.
The VAT deduction for hospitality is abolished.
A moratorium on winding-up orders ended in September, but there are still restrictions on filing.
Corporate rates continue to climb from the end of March. At the same time, the moratorium on the eviction of commercial tenants ends, to be replaced by a new arbitration system.
Even before omicron ruins the holiday season, the Bank of England has warned the extra costs could threaten businesses.
Chief Economist Huw Pill was optimistic about the state of the recovery, but warned that “the leak in this more optimistic view is … the end of various programs, which are delaying wind-up and liquidation orders. other insolvencies, “he told Treasury Select. Committee last month.
“If that shoe is to drop at some point in the next few months, we could see unemployment rise as a result of micro-businesses going through this process.”
Julie Palmer, of the Begbies Traynor insolvency group, says she is starting to notice a pick-up in terms of signs of distress among businesses, especially since courts reopened, allowing creditors to take action on debts.
Businesses face wave of collapses
Insolvency numbers are still below their pre-Covid levels, but she has identified 800,000 companies feeling the pressure.