Written by: Keith Tully
Reviewed: Wednesday 31st July, 2019
Companies based in England and Wales became insolvent during the second quarter of this year at rates not seen since 2014, according to the latest official figures.
The Insolvency Service has revealed that 4,321 companies entered insolvency between April and June of this year, which represents a notable increase compared to the first three months of 2019 when 4,213 became insolvent.
The numbers are being taken as an indication that businesses across the UK are dealing with a variety of operational headwinds and financial headaches, in part because of ongoing Brexit-related uncertainty.
Compared to the first quarter of this year, the second quarter saw corporate insolvency rates increase by 2.6 per cent but compared to the same quarter of 2018 the increase is tracked at a much sharper pace of 11.9 per cent.
“Today’s figures are evidence of a difficult period for UK businesses,” commented Duncan Swift, president of the insolvency and restructuring trade body R3.
“Tighter constraints on consumers and significant uncertainty about the future of the UK economy and the UK’s relationship with the EU are just some of the key factors at play that are making the business climate a challenging one.”
Sectors of the economy picked out as suffering particularly badly in the current economic climate include retail, which has seen a sharp downturn in consumer confidence in recent quarters, and manufacturing, where output and confidence levels are notably low.
Mr Swift from R3 has pointed out that for a lot of companies entering insolvency can be the “best means of dealing with stalled growth”.
However, he also notes that rising levels of Creditors’ Voluntary Liquidations (CVLs) recorded in recent months suggests that rescuing insolvent businesses is proving difficult in the current climate.
“Any company directors who are concerned about their business or the market conditions it’s operating in should seek advice from a knowledgeable and qualified professional source,” Mr Swift said in his recent statements.
“The earlier they do, the more options they will have for helping their company recover and start to thrive again.”