Following on from our March 2022 article, corporate insolvencies in the financial year ending 2022 tracked along at more or less the same rate as in the financial year ending 2021. In the 2021 financial year there were 6049 corporate insolvency appointments and while the numbers for the financial year ending 2022 are not yet complete it is expected that the final number will be approximately 6,500 appointments. Although this is an increase of approximately 7% on the previous financial year it is still a long way below the long running average of 10,744 appointments per financial year.
Personal insolvency appointments for the financial year ending 30 June 2022 remained historically low, being approximately 40% of historical averages and continued to fall in the financial year 2022. For the financial year 2021 there were 10,628 personal insolvency appointments whilst we are likely to see approximately 9,500 in the financial year 2022 when all the data is available.
Notwithstanding the low number of insolvency appointments in the financial year 2022 the business and financial environment continues to deteriorate with numerous factors impacting on the economy during the financial year ending on 30 June 2022.
Inflation – Continued high inflation will place pressure on businesses and households.
Interest rates – We have already seen increases in recent months and markets are predicting further increases by the end of 2022 with a peak in the cash rate at approximately 3.8% in mid-2023. For each 1% increase in the case rate Australian households have about a 5% decrease in disposable income which means less money to be spent in the economy.
Supply chain – Difficulties will continue for the next 18 to 24 months whilst the cost of shipping goods to Australia remains almost 400% above the historical averages. Shortages in transport capacity will keep prices high throughout the 2022 financial year.
Staff shortages – Increases in wages are already having an impact on many industries and this trend is expected to continue through the 2023 financial year.
Energy prices – These remain high especially the price of petrol and it is expected that prices will remain high in the foreseeable future.
Given all these factors facing the Australian economy it is a matter of time until we see the impact on businesses and individuals converted into increasing insolvency appointments. Experts predict that it is likely there will be a slow increase in appointment numbers through the financial year ending 2023 with appointment numbers peaking at approximately 120% of the historical averages towards the end of 2023.
The comments in this article are general and may not apply to your specific circumstances. You should seek your own independent advice.