Jamie Walker

The COVID-19 Pandemic has been the most disruptive economic event in recent memory. Here we look into the effect on UK businesses?

In this article we’ll look at the data we gather from Companies House which is available in our DoordaBiz product to see what the impact has been on the Company Register over the last 12 months.

Registrations

looking at the graph above, We can see new company registrations fell drastically during March and April 2020 when compared to the same period in 2019.

On the surface, it would look like aspiring business owners were waiting for the lockdown to end before they launched their new ventures as registrations rose by 118,279 during June – December when compared to 2019. Even the 2nd national lockdown in November did little to put off these self-starters.

It seems the lockdown has given people more time to work on their personal projects and launch their own ‘kitchen table startups’. With further support from government grants, loans and business tax relief, 2020 saw an explosion of new business looking to make the most of these strange times.

Liquidations

This graph details compulsory liquidations, this occurs when a company is forced to sell off assets to pay creditors. This is a good indicator of the number of companies who are in serious trouble. Surprisingly, compulsory liquidations have plummeted since the first lockdown in March. This is likely due to government support via business rate freezes and cheap loans such as BBLS and CBIL. However, we would expect this to increase with the removal of government schemes over the coming months.

This is one to watch so we’ll be updating this regularly to see if a lift in the economy reduces the failure rate, or more companies are forced to foreclose if a serious recession kicks in.

Charges

A charge (Company Charge and Mortgage) is a security interest held by a lender in exchange for a loan. This can be anything from revenue, Intellectual Property or company assets such as stock or loans. It is a good measure of how many businesses are growing their debt exposure or paying it down. The graph above shows charges plummeting in April and remaining low through the year.

This could reflect companies not willing to expand in these uncertain times or government providing access to cheap loans such as the those mentioned above.

In summary

It’s undeniable that the lockdowns associated with COVID have had a dramatic impact on the commercial landscape. The question is how long will it take for the numbers to revert to back to expected values. Watch this space.

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