The latest insolvency statistics for Q3 have shown for the first time an increase in underlying liquidations of 22%. This has led to a 15% increase in Q3 when compared to Q2 2017 and a 14% increase when compared to Q3 2016.
Much will be read into these figures due to the current political and economic situation. Wages are running behind inflation leading to a fall in living standards. This has had the effect of consumers putting off big-ticket items such as houses, white goods and cars and all the indicators in those sections of the economy are showing indications of a slowdown. So it is not really surprising that there have been some indicators of a worsening situation showing up in the insolvency statistics.
However, when you take out liquidations the picture is not so clear. In Q3 2017 there were an estimated 320 administrations, 1.1% lower than in Q2 2017 and 12.7% lower than the same period in 2016. There were an estimated 80 company voluntary arrangements (CVAs) in Q3 2017, 3.6% lower than the previous quarter but 14.3% higher than Q3 2016.
It should be remembered that although wages are lacklustre the employment rate is very high which helps prop up growth.
Analysis by business sector is showing yet again that the construction sector has the highest rates of insolvency with 2,616 new company insolvencies in the 12 months ending Q2 2017, which was unchanged compared to the 12 months ending Q1 2017. The third highest number of new company insolvencies was the Wholesale & Retail Trade (including repair of vehicles) sector with 2,139 new company insolvencies in the 12 months ending Q1 2017, which was a decrease of 2.0% compared to the 12 months ending Q1 2017. These three sectors accounted for 50% of all company insolvencies.
In our experience, we are also seeing that HMRC are taking a harder line with companies that have had repeated time to pay arrangements.