A continuing increase in the number of corporate insolvencies is evidence of the effect that the economic and political climate is having on the corporate landscape.
That’s the view of Andrew Haslam, North East chair of insolvency and restructuring trade body R3, who was speaking after the Insolvency Service’s latest quarterly statistics showed a 0.4% rise in the number of corporate insolvencies across England and Wales during the third quarter of the year.
The IS report also shows that there has been a 1.6% year-on-year rise in number of corporate insolvencies from Q3 2018.
Andrew Haslam, who is also head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “These figures are further evidence of how the economic and political turbulence of the last 12 months has taken a tangible toll on businesses.
“Uncertainty and stop-start stockpiling are among the factors hitting recruitment, investment, and wider business health, and we’re also seeing more businesses worrying about their cashflow levels and their order books over the next quarter and the next year.
“Businesses and consumer concerns about Brexit, the political uncertainty in the UK and the direction of travel of the UK’s economy are generally depleting order books, while other issues are also impacting on specific industry sectors.
“Bricks and mortar retailers are still grappling with the challenges posed by online rivals, manufacturing output and confidence is low, car sales and manufacturing have declined, and the construction industry is suffering.”
The Insolvency Service’s latest statistics showed that the number of administrations has continued to rise to reach their highest quarterly level since the first quarter of 2014, while the number of compulsory liquidations has fallen for the third successive quarter to their lowest level since Q4 2017.
Andrew Haslam continues: “The number of administrations – a procedure specifically designed to support business restructure and rescue – has increased by 20% since the last quarter, and the troubles, for example, of many High Street retailers have made this a very visible trend for all to see.
“The increase in Creditors’ Voluntary Liquidations also suggests business rescue is more difficult to achieve in the current economic environment, perhaps as a result of greater uncertainty that purchasers can deliver sustainable business turnarounds.
“Economic uncertainty is putting corporate customers and consumers off from making big purchases. Many consumers will be focusing on the essential items, while personal finance worries are higher now than they’ve been for many years.
“For some businesses, restructuring through an insolvency procedure is the best means of dealing with stalled growth, and any company directors who are concerned about their business or the market conditions it’s operating in should look to seek advice from a knowledgeable and qualified professional source as early as they can.”