Exaro News Archive Rate of company collapses continues to fall across UK...

Rate of company collapses continues to fall across UK economy

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Rate of company collapses continues to fall across UK economy

Insolvency Index: turnaround in manufacturing and Scotland in data for second quarter

By Tim Wood and Henry Kirby | 31 July 2015

“Even a small rise could be too much for those businesses already on the edge” – Andrew Tate, vice-president, R3, on interest rates

This year’s falling rate of company failures is gathering pace as even the manufacturing sector sees a turnaround in insolvency levels.

New figures from the Exaro Insolvency Index show how company failures fell faster year on year in the second quarter of the year than in the first.

Andrew Tate, vice-president of R3, also known as the Association of Business Recovery Professionals, said: “Insolvency levels are back down to where they were before the financial crisis, as growth continues to be stable.”

The number of companies that filed one or more insolvency notices decreased in the three months to July compared with the same period last year by 6.6 per cent, going from 6,841 to 6,390. By comparison, the year-on-year decrease for the first quarter was only 2.7 per cent.

The second quarter figure of 6,390 companies that filed an insolvency notice was also down from the 6,791 for the first three months of 2015.

The manufacturing sector saw an even stronger year-on-year drop in the number of companies in insolvency in the second quarter of the year, down by 11.3 per cent from 575 to 510. The equivalent figure for the first quarter was up on the previous year by 0.4 per cent, rising by two companies to 525.

But Tate said: “Small businesses really need to start to think about how a rise in interest rates will affect them.”

He pointed to a hint earlier this month by Mark Carney, governor of the Bank of England, that the base rate of interest in the UK could rise at the end of this year.

Tate warned: “Even a small rise could be too much for those businesses already on the edge.”

The decrease in insolvencies in the construction sector was especially marked, with 14 per cent fewer companies that filed an insolvency notice in the second quarter of 2015 compared with the same period last year.

The figure for the second quarter fell from 1,117 companies in 2014 to 961 this year, which was down from 1,018 in the first three months of 2015.

The Exaro Insolvency Index is the most comprehensive survey of its kind – covering all types of company failure, for all sectors and across the UK.

The top graph to the right, which can be clicked to enlarge, shows how the UK overall saw falls in all types of insolvencies: administrations and receiverships, winding-up petitions, orders or resolutions to wind up, and appointments of liquidators. And a more pronounced set of decreases across all insolvency types can be seen for the manufacturing sector in the second graph.

By contrast, insolvency levels rose by 5.7 per cent overall in the real-estate sector, increasing from 263 to 278, and 4.9 per cent among information and communication companies, going from 526 to 552.

The number of IT consultancies that filed an insolvency notice increased especially sharply, up 14.3 per cent to 216 in the second quarter from 189 for the same period a year ago.

Meanwhile, Scotland saw a big improvement after suffering a sharp rise, year on year, in the data for the first quarter of 2015. In the latest figures, 17.3 per cent fewer Scottish companies filed an insolvency notice, down to 396 in the quarter just gone from 479 in 2014.

Scotland had a year-on-year increase of 13.6 per cent in the number of companies that filed an insolvency notice in the first quarter compared with the same period last year, even though the picture for the whole of the UK was improving.

The Exaro Insolvency Index is based on insolvency notices in the London, Belfast and Edinburgh Gazettes, combined with information from Companies House. A small proportion of the insolvencies is not ascribed to a specific sector in the source data. 

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Sarah Davies
Sarah Davieshttps://www.exaronews.com/
Exaro News investigates matters of public interest and seeks to uncover the truth.

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