Q3 2019 insolvency statistics – R3 response

Commenting on the Q3 2019 (July-September) England & Wales insolvency statistics (published this morning by the Insolvency Service), Duncan Swift, president of insolvency and restructuring trade body R3, says:

Corporate insolvencies

  • Underlying corporate insolvencies (seasonally adjusted) rose by 0.4% in Q3 2019 compared to Q2 2019, and rose by 1.6% compared to Q3 2018.

“Today’s figures are further evidence that the economic and political turbulence of the last 12 months has taken its toll on businesses. Uncertainty and stop-start stockpiling are among the factors hitting recruitment, investment, and wider business health, and we’re 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, and there are other issues as well. Bricks and mortar retailers are still grappling with the challenges posed by online rivals, while manufacturing output and confidence is low. Car sales and manufacturing have declined, and the construction industry is suffering.

“Numbers of administrations, a procedure designed to support business restructure and rescue, have increased by 20% since the last quarter, and are at their highest since the first quarter of 2014.

“Meanwhile, the increase in Creditors’ Voluntary Liquidations suggests business rescue is more difficult to achieve in the current economic environment, perhaps reflecting 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.

“Company directors who are concerned about their business or the market conditions it’s operating in should seek advice from a knowledgeable and qualified professional source. The earlier they do, the more options they have in terms of business rescue.”

Personal insolvencies

  • Personal insolvencies (seasonally adjusted) increased by 0.6% from Q3 2019 compared to Q2 2019, and rose by 22.7% compared to Q3 2018.

“Today’s figures provide a worrying insight into the state of personal finances; the comparison with the same quarter last year shows an especially steep increase in personal insolvencies.

“British consumers’ confidence is low – they’re spending less, the economic uncertainty is putting them off making big purchases, and they are pessimistic about the economy and how it will fare over the next year.

“Although real wages have hit a recent high, they are still lower than they were before the financial crisis. Unemployment may be low, but it’s not necessarily secure for everyone. The most recent figures [June-August of this year] show that the number of people in full and part-time employment fell, while the number of self-employed people increased in the same period.

“Consumer borrowing has increased at the slowest rate for five years, although that may be more of a reflection on the low level of consumer confidence in the UK, with people preferring to save rather than spend – and Britons are more worried about their personal finances than they have been for many years.

“Anyone concerned about their financial situation should get advice sooner rather than later. Non-judgemental, expert and professional help can make the world of difference to someone’s finances – and can often help them make a considered decision rather than a rushed one.”