Written by: Keith Tully
Reviewed: Tuesday 29th July, 2014
The Insolvency Service has released its quarterly statistics on insolvencies with figures painting a healthy picture for companies across the UK.
The latest statistics show that the number of UK companies entering into administration is it the lowest level for almost ten years.
There were 410 administrations during the second quarter (April to June) of 2014 - the lowest since 2005. This represented a decrease of 19.2% compared with the previous quarter and 34.9% lower than the same quarter in 2013, as well as a decrease from the peak of nearly 1,700 in 2008.
In addition, the number of UK company liquidations from June 2013 to June 2014 is at its lowest level since records of this nature began – showing that fewer companies are being issued with winding-up petitions by HMRC.
Some industry experts have predicted an increase in insolvencies when interest rates rise, whilst others believe the increase could have limited impact.
"An interest rate rise could cause some businesses extra problems, but it would have to be more than a couple of quarters of a percentage point to make any real difference," said Phillip Sykes, vice president of industry trade body R3.
Chris Ratten, a business restructuring specialist, said:
“In the past, we’ve tended to see an uplift in corporate insolvencies as the economy starts to come out of recession, but it’s very different this time around.
“However, these numbers hide the reality that many firms owe their continued survival to ongoing record low interest rates.
“Many of these companies, particularly those who have been placed onto interest-only deals with their banks, will have to brace themselves for the promised rate rises over the new few years.”