Euler Hermes, the trade credit insurer, has found that Britain’s small businesses are in a more vulnerable situation than their counterparts in France and Germany.
Only 7 per cent of SMEs in Germany are at risk of failure within four years, and 13 per cent in France.
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The trade credit insurer said that manufacturers and suppliers to the car industry ranked among the most vulnerable, with more than 33 per cent in the sector exposed to the risk of insolvency. About 25 per cent of those in the energy sector and 20 per cent in construction were said to be at risk.
British business failures remained low during the pandemic, thanks to unprecedented Government support, as well as measures to protect companies from insolvency, but distress is expected to rise as the economy reopens, support is withdrawn and loans need to be repaid.
Ana Boata, head of macroeconomic and sector research at Euler Hermes, told the Times: “While Government support has provided a safety net for swathes of the economy, the threat of insolvency remains all too real for many SMEs. Supply chain disruption leaves many open to shortages and inflation, which will limit growth, but we also expect payment terms and the length of time it takes to get paid for orders to rise.”