The number of companies entering insolvency hit a five year high in the second quarter of 2019 as financial pressures intensify.
Figures from the Insolvency Service show that 4,321 companies entered insolvency between April and June, up 2.6% on the previous quarter and 11.9% on the same period last year.
It was the highest number of insolvencies in a quarter since early 2014.
The number of personal insolvencies fell slightly, but the increase in the number of businesses that are unable to pay their bills shows the vulnerability of businesses to financial headwinds.
Experts attributed the growth in company insolvencies to the effects of Brexit.
Duncan Swift, president of insolvency and restructuring trade body R3, said: “Today’s figures are evidence of a difficult period for UK businesses.”
“Tighter constraints on consumers and significant uncertainty about the future of the UK economy and the UK’s relationship with the EU are just some of the key factors at play that are making the business climate a challenging one.”
He continued: “Businesses which stockpiled items ahead of the original Brexit deadline of 29 March will now be seeing those decisions have an impact on their cash flow levels.”
Other figures showed that the number of personal insolvencies continued to decline after hitting an eight-year high at the end of 2018.
In the second quarter of the year, the number of personal insolvencies dropped 1.3% from 31,346 to 30,937.
But while the less severe forms of personal insolvency like Individual Voluntary Arrangements and Debt Relief Orders have fallen, full blown bankruptcies have increased to their highest level since 2014.
Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency, said: “These figures paint an uneasy picture for businesses and individuals in the build-up to an Autumn Brexit. Businesses are already feeling the pinch and the fact that the number of bankruptcies has increased is an indicator that more people are struggling with more serious debt problems.”
For more information about business and personal insolvency solutions, speak to a member of the Umbrella Insolvency team today. Call: 0800 611 8888.