In 2021, we are going to see a rise in insolvencies. This is for numerous reasons, particularly the unprecedented third lockdown which we are going through (at the time of writing) and the eventual receding of Government help.

Both will cause a shockwave to the economy. Here is who I think is most likely to be affected.

Companies selling non-essential goods

Consumers are increasingly keeping an eye on their purses and naturally are cutting out costs that are not essential to surviving the Covid-19 crisis. Some non-essential good providers worse affected will be:

Automobile companies

 Lockdown means travel is restricted to only what is essential with all other forms of travel being made illegal. As a result, people do not need to invest in a new car or replace their existing vehicle, because they are hardly driving them. The only light at the end of the tunnel is the extension of Ultra Low Emissions Zone (ULEZ), which is due to take effect in October 2021. This means diesel vehicles that are older than 2015 will be charged for driving in certain areas of London. This will have consumers exchanging their diesels for petrol or electric vehicles.

Travel sector

Airlines are at the whims of the countries and their restrictions. The UK currently has an increasing red list of countries whose citizens are not permitted to enter the UK (unless you are a British national stuck over there). Of course, airlines are not entirely dependent on what the UK does or doesn’t do and can restructure to supply to countries where travelling is still allowed.

Boris Johnson has predicted restrictions in general to loosen from 8 March 2021. Whether this is realistic or optimistic is yet to be seen. If the Prime Minister has got his dates right, airlines will be able to breathe a sigh of relief from next month.

Food and hospitality

The Eat Out to Help Out scheme helped to an extent – or maybe just delayed the inevitable – time will tell. Restaurants, cafes and coffee shops are restricted to delivery and collection only which may or may not be enough for them to survive until the restrictions are loosened. The third lockdown is a real kick in the teeth for them as I am sure many were starting to see the shoots of recovery.

As for others in the hospitality sector such as bars, hotels and event spaces, many of these are unable to run (as is the case for bars and pubs), others are only being used for only essential reasons (hotels for people undergoing essential travel). As for event spaces and the like, many may be able to transition their events online which could be the stop gap they need.

What does this mean for businesses?

I have been helping businesses for almost three decades tackle issues, Navigating them through recovery during tough climates. We’re all in the same boat and unfortunately many factors affecting our businesses are somewhat not in our control.

That does not mean we cannot respond at all. If we act early, act fast and make the right decisions, we can get through this period together.

Talk to me

If you want to learn more and understand how your business can be helped, please call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations are in strict confidence and the first conversation is free of charge, for as long as you need. You can also email me on vee@navigatebr.com or sign up for a free business review.