Businesses have been caught up in a wave of liquidations across UK

Economic situation could be worse if lockdown is three months

LEICESTERSHIRE businesses have been caught up in a wave of liquidations across the UK – which started even before lockdown measures were officially introduced.

That’s according to an analysis of public notices placed in The London Gazette – the official public record.

There is a delay between liquidators being appointed and notices being published in The Gazette, meaning that we can’t yet tell how effective the government’s package for businesses has been at stopping the rise in liquidations.

However we do know that at the very least, 17 Leicestershire businesses have entered liquidation since Boris Johnson’s press conference on March 16, and seven of those came after March 20 – the day the Chancellor announced his package of support.

It is worth noting that many of these liquidations may not have been to do with the coronavirus, and could have happened anyway.

However they could be a part of a nationwide wave in businesses going bust that started on Feb 24.

Since that date, 71 Leicestershire businesses have entered liquidation.

The analysis shows that 20 businesses with Leicestershire addresses appointed liquidators the week of March 2, as did 21 more during the week of March 9.

The following week, Boris Johnson made his announcement advising people to work from home if they could, as well as to avoid pubs and bars.

The analysis comes as separate research by a group of accountancy firms has revealed that almost one in five small or medium sized businesses (SMEs) will not be able to survive the lockdown, despite the support measures currently announced by the Government.

The research, by the Corporate Finance Network, found that if the lockdown lasts three months or more, the situation looks even more dire with accountants in the network reporting that 31% will have to close down their business by June.

The network are asking the government to help the more robust SMEs buy those who are more at risk, with a view to turning them around once the lockdown is over.

Kirsty McGregor, founder of the Corporate Finance Network, said “The Coronavirus Business Interruption Loans were never going to be appropriate for most businesses, and there has been a lot of misconception about them from the moment the Chancellor first announced them.

“It is so frustrating that we are wasting valuable days and weeks, without tackling this head on, with solutions that will work for the majority of the SME Economy. I urge the Treasury to get in touch with me.”

Looking nationally, there has been a clear spike in businesses going into liquidation in March.

The week of March 9 – before Boris Johnson told people to work from home if they could – saw 1,100 companies go into liquidation.

And a massive 1,170 companies went into liquidation the week before.

That’s compared to 782 liquidators appointed the week of Feb 24, 557 the week starting Feb 17, and just 538 the week starting February 10.

A spokesperson for the Treasury said: “The chancellor has been clear that banks should support small and medium-sized businesses during these difficult times.

“That is why we’re taking unprecedented action to support firms, jobs and our economy through £330bn in business loans and guarantees, paying 80% of the wages of furloughed workers for three months, VAT and tax deferrals, introducing cash grants of up to £25,000 for small companies and covering the cost of statutory sick pay.

“We’re working with the financial services sector to ensure that companies feel the full benefits from this support.”