The latest company insolvency statistics for the third quarter (July to September) of 2015 show a significant fall in the number of failing companies across the UK, with businesses in London and Wales performing particularly well. One of the key drivers of the decrease was a fall in compulsory liquidations, which reached its lowest level since the third quarter of 1989.
The figures show company insolvencies have fallen year-on-year for the third quarter in a row. There have also been recoveries in key sectors, with retail, manufacturing and real estate insolvencies all down by more than ten percent.
Lowest insolvency rates in London and Wales
The best performing area in the UK was London, with the number of companies filing for one or more insolvency notices from July to September down 22 percent on the previous year, from 1,742 to 1,355. This figure includes compulsory liquidations, creditors’ voluntary liquidations, administrations and company voluntary arrangements (CVAs).
Wales was the next best performing region, with a 19.8 percent drop in insolvency notices, down to 130 from the 162 insolvencies during the same period last year.
The performance across the UK was strong, but not quite as spectacular as in these areas. Company insolvencies for the year to date fell by 11.5 percent, from 6,855 in Q3 2014, to 6,069 in Q3 2015. This marks a further deceleration in the number of insolvencies this year, with a further 5 percent fall on the figures for the last quarter.
Why are insolvencies continuing to fall?
Despite a turbulent few months for the global economy, these figures show the UK has continued to perform well and remains one of the fastest growing developed economies. There has been a fall in the UK’s Gross Domestic Product (GDP) for the quarter, from 0.7 to 0.5 percent, but this seems to have had little impact on the health of the majority of UK companies.
In response to the latest statistics, a spokesperson for the UK insolvency industry has explained why insolvencies are continuing to fall: “Since the recession, management teams are much better at spotting the warning signs of trouble. They have learnt their lesson and the tightening of credit has made many companies much better at forecasting their financial requirements.
“There are also other options available today outside the formal insolvency route, such as debt-equity swaps and voluntary arrangements, which will continue to keep the numbers down.”
Insolvencies fall in key sectors
The statistics also show a decline in the number of corporate insolvencies in key sectors of the UK economy. Insolvencies in real estate, retail and manufacturing have fallen by 15.2 percent, 14.4 percent and 13.8 percent respectively.
However, some sectors are still causing concern. Although insolvencies of information and communication companies fell by 1.3 percent year-in-year, there was a significant rise in the failure rates of software developers and IT consultancies, with year-on-year insolvency increases of 27.1 percent and 12.9 percent respectively.
The total number of new company insolvencies by industry is always presented with a lag of one quarter, as it takes some time for the data to be collected by industry. However, it will come as little surprise that the highest number of new company insolvencies in the twelve months ending Q2 2015 was in the construction sector, where high failure rates are common.
The five industry sectors with the most new company insolvencies in the second quarter of 2015 were:
2. Wholesale and retail trade
3. Repair of motor vehicles and motorcycles
4. Administrative and support service activities
5. Accommodation and food service activities
If you want to rescue your business and are one of those companies struggling with company debt or threatened with a winding up petition call 08000 746 757 or email: email@example.com today.
Written by: Mike Smith