Two thirds of businesses at risk of insolvency

The Office for National Statistics (ONS) latest results of its Business Impact of Coronavirus Survey have found that that two-thirds of businesses currently trading have a ‘low to severe risk’ of insolvency.

The ONS analysis shows that 64% of businesses are at risk of insolvency, with 43% running on less than six months’ cash reserves. The report also notes that 14% of UK businesses have paused trading under local lockdown restrictions.

Businesses in the hospitality industry are at the highest risk of entering administration, with 17% of all accommodation and food companies currently trading at ‘severe risk’ of insolvency.

Whilst 7% of all pubs, restaurants and hotels in the UK have zero cash reserves, the latest data showed.

Figures up to the 4th October showed a slight increase in the number of UK businesses resuming trading in October, with 86% of businesses in the UK currently operating compared to just 66% in June.

Businesses in the arts and entertainment industry have taken the biggest hit from the pandemic, with 30% of companies in the sector currently cloase.

The pandemic continues to weigh on those businesses that have reopened, with almost half of companies that have resumed trading experiencing a decrease in turnover compared to normal business at this time of year.