Following the release of the Q2 2017 insolvency statistics, John Cullen, corporate recovery and insolvency partner at Menzies LLP, reviewed the published results to isolate some of the key take aways for business.
Insolvency Statistics Key Finding
Whilst a modest rise in the number of corporate insolvencies was expected, it reflects deepening concern about the state of the economy and there is a prospect of more to come.
The increase is partly due to a rise in company voluntary insolvencies and compulsory liquidations and can be attributed to the more streamlined approach being taken by HMRC when collecting debts.
Although the upward pressure on the interest rate has, for now, eased, at some point interest rate hikes will hit both businesses and individuals hard and the number of corporate insolvencies is expected to climb more steeply.
Ongoing political and economic uncertainty is making people much more conscious about spending and this will be exerting a degree of upward pressure on insolvencies. In particular, the retail and construction industries are feeling the effects of tightened purse strings. Pipelines for house builders are drying up and retailers are noticing a distinct slowdown in consumer spending.
Businesses must avoid falling into the trap of doing too little too late. Taking early advice where possible at the first sign of financial distress is vital and speaking to a professional at an early stage can be the first step in bringing a business back from the brink.
John’s comments also featured in London Loves Business.