July 30, 2019 / 11:54 AM / 23 days ago

UK company insolvencies hit five-year high in second quarter

LONDON (Reuters) - The number of insolvent companies in England and Wales hit its highest in more than five years in the second quarter of 2019, according to data on Tuesday that showed businesses under rising financial pressure as Brexit nears.

FILE PHOTO: A boy cycles past a closed down retail unit for rent in Stockport, near Manchester, Britain June 11, 2018. REUTERS/Phil Noble

The Insolvency Service, a government agency, said 4,321 companies entered insolvency in the April-June period on an underlying basis, excluding bulk closures of personal service companies. This was up from 4,213 in the first quarter and marked the largest total since early 2014.

The figures showed fewer personal insolvencies, chiming with other data that show resilience among consumers but a muted picture of the business economy.

“Today’s figures are evidence of a difficult period for UK businesses,” Duncan Swift, president of insolvency and restructuring trade body R3, said.

“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.”

(GRAPHIC-Company insolvencies rise sharply: tmsnrt.rs/2ymGEwu)

The number of personal insolvencies continued to decline after striking an eight-year high at the end of 2018, dropping to 30,937 in England and Wales in the second quarter from 31,346 in the first three months of 2019, the Insolvency Service said.

The fall masked some concerning trends, R3’s Swift said.

While the number of less-severe forms of insolvency such as individual voluntary arrangements and debt relief orders declined in the first quarter, the number of full-blown bankruptcies rose to their highest since late 2014.

The rate of individuals entering insolvency over the year to June rose to 26.2 per 10,000 adults from 25.8 in the first quarter — the highest rate since early 2012 and reflecting a spike in insolvency in late 2018, the figures showed.

“The situation is still serious for the UK’s personal finances,” Swift said.

Reporting by Andy Bruce, editing by David Milliken, William Maclean

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