New figures from the Insolvency Service show the first quarter of 2019 had the second highest underlying level of insolvencies in any quarter since Q1 2014.
According to the figures, there were 4,187 total underlying company insolvencies in England and Wales in Q1 2019, a rise of 6.3% on the last quarter and up 5.1% on the same quarter last year.
This rise was driven by increases in creditors voluntary liquidations (CVL) which increased by 6.2% compared to Q4 2018 and administrations which were up 21.8%. CVAs also increased by 43.1%. Compulsory liquidations fell in Q1 2019 by 2.7%.
In Q1 2019 there were 451 administrations, 21.8% higher than Q4 2018; this was the highest number of administrations since Q1 2014. Compared to the same period last year, there were 26.8% more administrations.
Furthermore, there were 93 CVAs in Q1 2019, a 43.1% increase on Q4 2018.
The wholesale and retail trade as well as the repair of vehicles industry grouping saw the largest increase in underlying insolvencies, with 67 extra cases – or 9% rise – compared to the 12 months ending Q4 2018. This was closely followed by the administrative and support services grouping (66 additional insolvencies); manufacturing (58 additional insolvencies); and the accommodation and food services grouping (57 additional insolvencies).
The arts, entertainment and recreation industry saw the largest decrease in underlying insolvencies, with 23 fewer cases compared to the 12 months ending Q4 2018. Excluding bulk insolvencies, in the twelve months ending Q1 2019, the highest number of new company insolvencies remains in the construction industry with 3,013 insolvencies – up 0.6% from the 12 months ending Q4 2018.
Graham Bushby, head of RSM Restructuring Advisory LLP said: “The direction of travel for company failures is unmistakably on the rise. Company administrations rose to their highest quarterly level in five years as Brexit related uncertainty continued to take its toll. People are clearly being cautious with their money in the face of uncertainty, particularly when it comes to big ticket purchases.
“Long haul holiday bookings are on the rise at the expense of European destinations, new car sales are down and big decisions such as moving house are being deferred or delayed which isn’t helping the property and construction industry. The effects on the consumer retail market have also been all too evident with the high number of high profile CVAs and retail failures.”
He added: “Some businesses have had their normal cash flow plans thrown awry by stockpiling in advance of the date of the UK’s supposed EU exit on 29 March. While many may be relieved that the immediate threat of a no deal exit has receded, some may be nursing a cashflow hangover which will need careful management over the coming months.
“Looking back over the 12 month period ending in Q4 2018, construction businesses continued to suffer the highest number of company failures, but the largest increase was in the retail and wholesale sector which saw a 9% rise in insolvencies to 2,346 cases.”