Written by: Keith Tully
Published: 10th February 2020
The number of companies entering administration in England and Wales increased by almost 5 per cent over the course of last year.
According to the latest figures from KPMG, the building and construction sector saw particularly sharp increases in administration rates, while the real estate and property industries also saw a jump in insolvency activity.
The figures are based on official insolvency notices posted in the London Gazette, with a total of 1,403 companies believed to have entered administration last year, compared to 1,341 in 2018.
Problems affecting high street retailers, many of which have entered Company Voluntary Arrangements (CVAs) in an effort to restructure and remain viable, are understood to have had knock on effects on businesses whose fortunes rely in part on the value of and demand for commercial properties.
Uncertainty around the Brexit situation and the lack of growth within the UK economy last year are also said to have contributed to making life tough for large numbers of operators within the construction sector.
The third quarter of 2019 saw particularly high rates of administration, with 420 companies across England and Wales finding themselves in that situation between July and the end of September.
Not all instances of insolvency lead to an entry into administration, with some companies collapsing in such a way that means they need to be entered into liquidation immediately, as happened in the case of Thomas Cook last year.
“2019 was a year characterised by profound political and economic uncertainty, with consumer confidence remaining fragile and companies continuing to bear the brunt of rising overheads and increased costs,” said Blair Nimmo, head of restructuring at KPMG UK.
“While many battened down the financial hatches, adopting a prudent and cautious strategy, for some, the challenging trading conditions proved to be a bridge too far.”
Hopes are that there will be fewer cases of administration and insolvency in 2020 than 2019 because the question of whether the UK will leave the EU has at least now been decided.
Many businesses have responded positively to the certainty that December’s general election result brought them, although economic challenges clearly remain for companies across many different sectors.