Cause for Concern - Jan 2018
17 January, 2018
16th January 2018
Cause for Concern –
Will raising interest rates rise trigger a jump in personal & corporate insolvencies?
What impact might UK’s first base rate rise in a decade have on the level of personal and corporate insolvencies? If we cast our eyes back to the mid-noughties what we saw develop was a direct correlation between staged and consistent UK base-rate rises and an increased level of both personal and corporate insolvencies.
With current UK consumer debt spiralling beyond £200 billion, a significant number of people have managed to keep their heads above water, buoyed by the record low 10 year static base rate of 0.25%. Indeed the same can be said for so called “zombie” companies; organsiations that will likely never be in a position to repay their debt, but have, due to the historically low base rate, managed to service them.
As rates climb both individuals and companies that are burdened with debt will see minimum payments increase; a significant number of those companies will likely default.
We, as Insolvency & Turnaround specialists, are keeping a watchful eye on the situation as it unfolds.
If, as is expected over the coming months, further base rate rises are seen then the financial burden on stressed and distressed individuals and businesses could quickly unravel. Time-to-pay arrangements with HMRC may fall in default.
Where you find one of your clients becoming overburdened with commitments or are facing cash-flow related problems, getting advice from us early is paramount.
LA Business Recovery is the area’s longest established Business Recovery and Insolvency firm and we have proved to be the armoury to all of our professional and corporate clients. All enquiries will be dealt with in a confidential, professional and sympathetic manner.
To discuss any client related issues or any general Turnaround or Insolvency matter please call and speak to either Virgil Levy or David Hughes.
Virgil & David
LA Business Recovery Limited