Posted 29 October 2015 By Steve Elliott, Business Recovery and Insolvency Partner
In Business Recovery & Insolvency
The proportion of live companies which go into liquidation is now at the lowest (at 0.46%) that it has been since comparable records started in 1984 (according to the latest insolvency statistics published today, for the quarter to end September ’15).
The number of live companies has increased considerably in that period which will impact that comparative but in real terms, corporate insolvencies are still extremely low on any measure. Insolvencies in the construction industry, which is traditionally a “bellwether” for the general economy, were still the highest in number for the last 12 months but are down on the previous year. The retail sector also improved, although still in second place!
The same applies to personal insolvency, now at the lowest (per head of adult population) since 2005. The “credit crunch” and other cost disincentives to petitioning for bankruptcy have undoubtedly contributed to that fall.
Inflation and interest rates remain low which contribute to these apparently benign trading conditions.
However, one unwelcome consequence is that there is a lot of competition out there for the same business; there hasn’t been the massive “cull of the weaker beasts” that we saw in earlier recessions and we are seeing anecdotal evidence in different sectors of considerable price competition. There will also be a danger of skill shortages arising which will impact wage costs in due course and the inevitable rise in interest rates (although promised to be low and slow) will impact more on consumers first through their mortgages and then on demand for services.
A time for caution and, as always, take advice early to minimise risk.
To discuss this or anything else contact Steve Elliott on 01793 818300 or send him an email.