UK Company insolvencies at record 17-year low

company insolvency

The underlying number of company insolvencies in England and Wales has fallen to the lowest quarterly level in 17-years, according to latest statistics released by the Insolvency Service.

However, the total number of companies entering liquidation increased in quarter two but this was primarily caused by 1,131 connected personal service companies entering liquidation on the same date following changes to claimable expenses rules.

When the personal service company’s figures are removed the total number of liquidations fell 16 per cent from the previous quarter from 4,038 to 3,416 and is down 3.5 per cent year on year.

Brian Johnson, insolvency partner at the chartered accountants HW Fisher & Company, commented: “The slowing economy has yet to claim significant numbers of business casualties.

“Brexiteers will find much to cheer in these numbers, as underlying company insolvencies have eased to their lowest level since records began.

“The gross figures have been distorted by a brief outbreak of hara-kiri among personal service companies. After a rule change introduced by the government, more than a thousand of these companies fell on their swords in a single day.

“While the underlying figures are much more robust – with both voluntary and compulsory liquidations down on the previous quarter – the perennial problem with these official statistics is that they show only the number of companies falling off the cliff, not those teetering on the edge of the abyss.

“With inflation eating into margins and consumer confidence on the wane, the number of companies feeling the pinch is rising. For many, the one remaining ‘get out of jail’ card is Britain’s continuing low interest rate environment.

“But unlike the Brexit uncertainty, recent hints from the Bank of England suggest that the days of rock bottom interest rates could be numbered.