With one in every 213 companies falling in to liquidation last year, British businesses bankruptcy has hit a four year high.
Official figures which were published on Friday demonstrated an increase of 4.2pc since last year with 17,243 companies falling in to insolvency, the highest number since 2013. These figures also show the amount of people in England in Wales who became bankrupt climbed to 9.4pc in 2016 to 99,196 – returning to the levels seen in 2013 and 2014.
These figures came after the UK’s second-leading construction company Carillion buckled earlier this month, becoming the UKs largest corporate failure in a decade and damaging the construction sector.
Duncan Swift of restructuring trade body R3 said, “Intense competition and discounting in the run-up to Christmas added strain to retailers already fighting to attract customers reluctant to pay higher prices”.
“Businesses faced additional headwinds in 2017 with business rates changes, an increase in the National Living Wage, and the final stages of the pensions auto-enrolment roll-out,” he said. “Slower GDP growth has [also] hindered firms’ momentum.”
Administration and support services have been the most affected sectors, followed by wholesale, retail trade and the construction industry. The three sectors accounted for up to half of all company insolvencies.
These increases of insolvency come after the rise in the use of individual voluntary arrangements (IVAs). IVS’s allow companies to settle a debt within a fixed period of time as an alternative to bankruptcy. Almost 20pc IVA’s were taken out last year, the largest amount to date.
Alec Pillmoor of advisory firm RSM said: “There are clearly growing levels of financial distress in some households, due in part to rising interest rates, falling wages or changes to employment status.”
He said: “High levels of indebtedness – even for those with regular incomes – is such that they have no option but to enter one of the insolvency routes.”