The number of business insolvencies continued its upward trend in the second quarter of the year, according to the latest official figures released today.
While the number of insolvencies was down by 12% compared to the first quarter – when the figures reached a four-year high – it was 12% higher than the same period last year. Construction firms were the worst affected, followed by the retail, wholesale and vehicle repair sectors.
The figures show there were over 3,900 business insolvencies in the second quarter.
Paul Barber, North West regional chair of the insolvency and restructuring trade body R3 and a partner at Begbies Traynor, said the fall from the first quarter could be explained by the fact that insolvencies are often higher at the end of the financial year.
“Insolvency numbers have bounced around from quarter to quarter in recent years, but the underlying trend remains slightly upwards. Insolvencies in the second quarter were much higher than they were this time last year.
“While there has been a lot of attention on ‘big name’ insolvencies since the start of the year, particularly on the high street, it’s important to remember that one business’s struggles can have a serious knock-on effect on its suppliers and customers. Recent R3 research found that over a quarter (19%) of North West companies have suffered a hit to their finances following the insolvency of a customer, supplier or debtor in the last six months.
“R3’s members are reporting receiving inquiries for advice from companies in industry sectors linked to retailers, such as recruitment agencies and shop fitters.
“All businesses are facing a range of pressures. Sluggish economic growth isn’t helping, while staff costs for many are greater than a year ago, following April’s increases in the National Living and Minimum Wages, with pensions auto-enrolment expenses also part of the picture. Business rates rise to continue to be cited as a reason for business struggles, too.
“The sooner any businesses facing problems seek advice from a qualified and professional adviser, the more options they will have to turn themselves around.”