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© kheng guan toh dreamstime.com Analysis | June 27, 2018

UK: Underlying number of insolvencies at highest quarterly level since 1Q/14

"Underlying corporate insolvencies rose by 13 percent in 1Q/2018 compared to 4Q/2017, and rose slightly by 0.6 percent compared to 1Q/2017", comments Duncan Swift, vice-president of insolvency and restructuring body R3.
“A raft of profit warnings and lower than expected corporate results in the first three months of the year point to a difficult trading period over the festive season, while Black Friday at the end of November pulled consumer spending forward, eating into the success of the New Year sales. The ‘Beast from the East’ and repeated episodes of bad weather didn’t help, either. Indeed, the growth stats out indicate there was barely any economic growth in Q1 at all", he continues.

The insolvency figures for January to March may also have been affected by the fact that the end of the financial year is just around the corner in early April.

“Consumer confidence beat market expectations in March, although it’s still firmly in negative territory. Looking forward, the rate of pay growth is now slightly higher than inflation, meaning people have a bit more in their pocket to spend, which will be a relief to businesses dependant on the consumer pound."

Insolvency figures for the UK have risen over the first quarter of 2018 with a roll-call of high-profile names entering a statutory insolvency procedure and other – widely-reported – restructuring efforts. Crucially, any time a company encounters difficulties there is a ‘domino’ effect on its suppliers and customers who may face their own financial problems as a result of lost income or key supplies.

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September 21 2018 11:51 am V11.0.0-2