First signs of trouble for business?
The Insolvency statistics for the quarter to the end of September 2018 have just been released.
As far as companies are concerned there is a noticeable upward trend: company insolvencies are up nearly 9% on the previous quarter and 19% on the same quarter in 2017. This is underpinned principally by an increase in creditor’s voluntary liquidations which are up 26%.
In terms of other corporate insolvency processes, these also show an increase, albeit the absolute numbers are much lower than for liquidations. Administrations, for example, are up 13% on the previous quarter and 25.9% on the previous year.
The overall liquidation rate for companies has increased since its low point in Q3 2016.
It currently stands at 0.36% which is very much lower than previous record highs of 2.6% in 1993 and 0.9% in 2009. This reflects in part the much higher number of companies that are now on the register.
In terms of sectors showing signs of distress, construction leads the way:
As far as individual insolvencies are concerned, the picture is the opposite:
individual insolvencies are down 10.5% on Q2 and 2.5% on the previous year. The largest constituent of individual insolvencies is individual voluntary arrangements which are now down 18% on the record high in Q2 2018.
Brexit and other uncertainties, negative consumer confidence and high personal debt levels, and the possibility of interest rates being increased are all adverse factors for the business environment.
Perhaps the latest statistics which show more than 4,000 companies becoming insolvent in a quarter for the first time in 4 years are a sign of things to come?
Or maybe just wishful thinking from an insolvency practitioner on Halloween!