In Focus Risk
Last month, the Insolvency Service published its insolvency statistics for the fourth quarter of 2017 (October to December). Excluding one-off ‘bulk insolvency events’, corporate insolvencies in 2017 rose 2.5% from 2016. Likewise, excluding these one-off events,
there were 15,112 insolvencies in 2017 and corporate insolvencies fell by 17.2% in the fourth quarter compared to the third quarter of 2017, and by 10.9% compared to the fourth quarter of 2016. Meanwhile, personal insolvencies fell by
11% from the third to the fourth quarter, but were 10% higher than in the same quarter in 2016. In 2017, there were 99,196 personal
insolvencies, an increase of 9% on 2016, when there were 90,657.
Corporate insolvencies The slight rise in corporate insolvencies across 2017, as a whole, is a reflection of the difficult year that firms in England and Wales have been through. Once exceptional events have been
stripped out, there has been a small upwards
The fall in insolvencies, from the third to the fourth quarter, could hint at improving business conditions overall, although the acid test for this is going to be next quarter’s figures
trend in insolvencies since 2016, reversing several years of falling insolvency numbers. Inflation has eaten into many firms’
margins, thanks to rising input costs on the one hand, and with customers proving somewhat reluctant to stomach higher prices on the other. Firms have faced additional headwinds
in 2017, with business-rates changes, an increase in the National Living Wage, and the final stages of the pensions auto- enrolment roll-out.
Slower GDP growth has hindered firms’
momentum, too. Our members have reported that the
construction and retail sectors as being under the most strain. The construction stresses most obviously demonstrated by Carillion in the early part of 2018. Intense competition and discounting in
the run-up to Christmas has been another factor to add in to the mix in the last three months, although, if there is an insolvency impact of poor pre-Christmas trading for retailers, it will be seen in the next quarter’s figures – as will any knock-on effect of Carillion’s liquidation on its suppliers and sub-contractors. On the plus side, manufacturers have
started to benefit from a weaker Pound, which has balanced out some of the serious problems this caused for businesses earlier in the year. The fall in insolvencies, from the third to
the fourth quarter, could hint at improving business conditions overall, although the acid test for this is going to be next quarter’s figures.
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www.CCRMagazine.com
March 2018
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