News reports concerning the UK economy have begun to indicate a much more positive outlook for business in recent months, with many predicting recovery on the horizon. This is supported by newly released statistics from the Insolvency Service detailing insolvencies in the first quarter of 2014, which were published last month. Although these figures show that the number of insolvencies recorded in the first part of this year is up on the figures from 2013, with 1,072 compulsory liquidations and 2,649 creditors’ voluntary liquidations, the rises were only 4.8% and 4.9% on the same quarter last year respectively and so the figures are still encouraging.
Although the number of compulsory liquidations was significantly higher than the figures for the last quarter of 2013 – up 53.1% - the Insolvency Service explained this as a reflection of the fact that there was a significant drop off in compulsory liquidations in October to December 2013, rather than the January to April figures providing any particular cause for concern. The statistics for other corporate insolvency procedures (receiverships, company voluntary arrangements, administrations) showed a decrease of 2.8% on the same period last year.
In terms of the numbers of active companies experiencing difficulties, in the 12 months ending with the first quarter of this year, one in 167 active companies went into liquidation. That figure represents 0.6% of all active registered companies and is a drop in numbers from the 12 months ending in the last quarter of 2013. The rate of 0.6% is low, much lower than the peak of liquidations, which occurred in 1993 when 2.6% of active companies went into the liquidation process. The average over the past 25 years has been 1.2%.
The information released by the Insolvency Service also covers the number of insolvencies that have taken place broken down by industry. These statistics relate to the last quarter of 2013 as those for the first quarter of 2014 are not yet available. These numbers show that the construction sector suffered the most insolvencies during that time, with 2,665 recorded - 672 compulsory liquidations and 1,993 creditors’ voluntary liquidations. Although the construction sector figures were the highest for any individual sector they actually indicate a 5.5% drop from the figures that were produced for the previous quarter.
Wholesale and retail trade was the sector to demonstrate the second highest numbers of insolvencies, with 305 compulsory liquidations and 1,869 creditors’ voluntary liquidations. This was a slight increase on the numbers for the previous quarter, with liquidations up 0.6% in this sector in that time. Other sectors that saw fairly significant numbers of liquidations were accommodation, food and services (with 1,152) and manufacturing (with 1,11). The sectors in which insolvencies were at their lowest were agriculture, forestry and fishing (with 27), mining and quarrying (with 21) and electricity and gas supply (with 26).
So, overall, whilst businesses are still feeling the effects of the recent downturn, there is good reason to be positive as numbers start to stabilise. If your organisation is currently facing insolvency then we can help. Contact a member of our team for advice today on 01616 966 229.