The number of underlying company insolvencies in in England and Wales in the second quarter (Q2) of 2019 increased by 2.6 per cent to the highest level since the first quarter (Q1) of 2014.
The ‘Company insolvency statistics, Q2 April to June 2019’, published today by the Insolvency Service, highlight the immense strain small and medium sized (SME) businesses are under due to increased business rates, rising employment costs and the ongoing political uncertainty.
The largest share of insolvencies were seen within the construction sector, which has faced ongoing issues with late payments. More than 3,000 firms in this sector went under in the year ending in Q2.
Administration, hospitality and retail also suffered as they struggled with higher wages, pensions auto-enrolment costs and skills shortages.
Federation of Small Businesses (FSB) Policy & Advocacy Chairman Martin McTague, comments: “Uncertainty is now severely weighing on small firms and the self-employed, making it harder for them to invest, plan and grow. Central to this is the unknown nature of what the UK’s future relationship with the EU will look like and the growing risk of a cliff edge no deal Brexit on October 31, for which smaller businesses are simply not prepared.
“Smaller firms are under the cosh more than ever and it’s time for interventions to help prevent more businesses becoming insolvent.
“The Government’s words on Brexit preparedness need to be matched by actions: the automatic issuing of Economic Operator Registration and Identification numbers to VAT-registered firms that currently trade goods exclusively with the EU and access to Brexit vouchers to help smaller businesses to prepare for a no deal scenario on October 31.
“There’s a real danger that a chaotic, sudden no-deal exit on 31 October will cause insolvencies to spiral further, meaning a significant hit to UK economic growth.”
As we countdown to Brexit, it is essential that businesses put in place measures to help them adapt to the market changes. At Beavis Morgan, our specialist advisers to SMEs are able to assist with all aspects of business performance including putting adequate measures in place to protect the health of your business, both now and for the future.
Contact Steve Govey to find out more about how we can help you and your SME business.
There are also many underlying reasons why a company may fall into administration or insolvency. If you have any concerns about your business then it is beneficial to fully understand the possibilities for restructuring as early as possible to allow appropriate planning.