Insolvency Figures Spike for Q1 2012

Approximately 5,600 UK businesses became insolvent in the first quarter of 2012 — representing a rise of 5% on the previous quarter and the highest number since the fourth quarter of 2009 (5,834).

The figures were released by accountants, RMS Tenon and were collated using the firm’s early warning system, Tracker.

The insolvency rates vary between sectors and regions. Fewer companies in the manufacturing industry are going bust, compared to previous years. And yet the number of manufacturing businesses that are showing signs of “critical financial distress” is still high, according to RMS Tenon.

Approximately 25% of total insolvencies in the first quarter of the year were in the business service sector. Those suffering badly include equipment suppliers, IT consultancies, design agencies and public relation agencies.

Construction, retail and hospitality & tourism are also sectors with high levels of insolvencies. The construction and property sectors represent 17% and 7% of total insolvencies this quarter — levels that have remained the same for the past three years.

Carl Jackson, Head of Recovery at RMS Tenon said:

“The outlook for both these sectors continues to look difficult for the next 12 months with approximately 36,000 business in the construction sector and a further 10,000 in the property sector showing significant signs of distress.”

Retail and hospitality & tourism continue to struggle — they represent more than 16% of total corporate insolvencies in the first quarter of 2012 (9% and 7% respectively).

The regions with the largest year-on-year increase in the number of corporate insolvencies compared to the previous quarter were the South West and South East.

“We expect the number of insolvent businesses to increase in 2012 compared to 2011 but not by much,” adds Carl Jackson. “However, should the Olympics and the Queen’s Jubilee have an impact on the retail and hospitality and leisure sectors, especially in the South over the summer, the final picture could be very different.”

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>