There has been a significant increase in the number of companies falling into financial distress; this quarter has seen the fastest pace of companies registered as insolvent since the second quarter in 2009, during the financial crisis.
Data from the Insolvency Service, a Government agency, shows there was a 19.3 per cent annual rise in business insolvencies between July and September.
Figures indicated that 4,308 businesses registered as insolvent in the third quarter, with 72 per cent of those being creditors’ voluntary liquidations.
Duncan Swift, Vice President of insolvency and restructuring trade body R3, said: “This is the first time we’ve seen more than 4,000 corporate insolvencies in one quarter since the start of 2014. So far, 2018 has been a tough year for English and Welsh businesses, with insolvency numbers much higher in every quarter than in the same period last year.
Construction, retail and wholesale companies have had the highest number of insolvencies in the last 12 months.
Peter Dean, Chairman at finance broker Your Expert Group said: “The six-year high in creditors’ voluntary liquidations could send a bleak message to markets. Not only are banks getting more assertive, but in the current economic climate, many companies are deciding to simply shut up shop rather than see it out.
“Many sectors, not least retail, are evolving at such a pace that legacy companies are simply being left behind and are calling it a day.”
Even though figures indicate that consumers’ spending has been solid, industry analysts say retailers have suffered the most due to the shift to online shopping as well as people spending more on entertainment rather than clothes and household goods.
Nevertheless, the number of individuals registering as insolvent fell by 2.5 per cent compared with a year ago and 10.5 per cent on the previous quarter.