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Insolvency outlook revised downwards by credit insurer PDF Print E-mail
Friday, 25 September 2015

The global insolvency outlook for 2015 has weakened according to a new report by leading trade credit insurer Atradius.  A slowdown in the downward trend of insolvencies is forecast for the year ahead with the fall revised to 7% compared to the previously forecast 10%.

Insolvencies in the Eurozone are still 75% higher in 2015 than they were in 2007. Although predicted to improve, they will remain 67% higher in 2016. Overall the economic picture is improving,  but the business environment is still challenging and risk remains a factor.  The outlook is less optimistic than previously forecast with developments in many markets revised downward.

Jason Curtis, Commercial Director at Atradius, said: “Despite the good news that the economy is rebounding, we cannot forget that we are still operating in the shadow of recession. Testament to this is the number of insolvencies we are still experiencing in economies across the world. The slowdown in the fall of insolvency rates serves to highlight how volatile the global trading environment is for UK companies seeking to do business overseas.

“While global insolvencies are declining, it is now at a slower rate than previously predicted. Furthermore, it is only when you compare the picture to pre-recession levels that you can clearly see how far we have to go on the road to recovery.”

The report examines the outlook for all major markets: a snapshot reveals that declining consumer confidence and consumption has led the forecast for Belgium to be revised from an 11% decline in insolvencies to a modest 4%. Meanwhile, insolvencies in France have risen so far in 2015 after being forecast to fall for the first time since 2007. In Greece, the number of business bankruptcies is forecast to increase 9% in 2015, driven by the escalation of its debt crisis.  Less positive forecasts can also be seen outside the Eurozone, most notably in Switzerland where business failures are expected to rise 12% - driven by a surge in the Swiss franc which has made exports more expensive - and in Australia which will see a 2% rise in insolvencies compared to a previous forecast decline of 9%. In addition, low commodity prices are driving business failures in both Canada and Norway.

Jason Curtis continued:  “As economies improve and as appetite for growth increases we are pleased to be supporting businesses who wish to capitalise on opportunities. However, the environment remains challenging and it is important not to lose sight of the risks. Businesses trading in our volatile global economy must continue to protect themselves and have robust credit management systems in place. The risk of insolvency remains a significant factor and there are few businesses able to absorb the impact of a failed customer.  Insolvencies can put insurmountable pressure on a company, putting at risk millions of pounds of business in unpaid bills which could be lost overnight. The weakening outlook underlines the need to manage risks diligently to ensure that the opportunities that we are seeing can be leveraged to full potential.”

(Source - Atradius News Release)


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