There was good news on the economy in the government’s quarterly insolvency figures for April to June, published recently. Fewer companies are going out of business than at any time since late 2007, and the total number of individuals who became insolvent was at the lowest level since the third quarter of 2005.
The statistics cover England and Wales and show that a decrease in compulsory liquidations was the main driver of the continuing reduction in company failures, now at their lowest level since the fourth quarter of 2013.
So, in actual numbers, that meant 3,908 companies entered formal insolvency in the second quarter of this year, of which 765 were subject to a compulsory winding-up order. The liquidation rate was 0.48% of active companies, the lowest level since comparable records began in late 1984.
There were 18,866 individual insolvencies, 9.1% fewer than in the first part of this year and 29.3% down on the same quarter in 2014.
With bankruptcies down nearly 28% on the year to 3,944 and debt relief orders falling by 16.8% in the past year to 5,832, the personal toll of the economic slump is clearly easing.
The Insolvency Service presents an interesting set of statistics on the company liquidations – classified by industry. They cover the first quarter of the year, so lag behind the April to June figures.
The highest number of liquidations was in construction, 2,250, though down 6.8% on the previous 12 months. Of these, 588 were compulsory.
The second highest number of liquidations was in the wholesale and retail sector, with 1,926 liquidations of which 347 were compulsory.
Whether these statistics reveal continuing weak spots in the recovery is unclear. It’s not possible to say that the rate of liquidations in construction is higher than overall, as the base population of companies in the sector is not available.
However, they do point to the continuing importance for small and medium-sized enterprises of carrying out credit checks on new customers, a field in which SJ Collections can offer advice.