“High Alert” For UK Retail Sector Due To Company Insolvency Rates
Over 17,243 companies entered insolvency in 2017, rising 4.2% year-on-year, according to The Insolvency Service
This was driven by an 8.3% rise in creditors’ voluntary liquidations (CLVs). In this companies sell off their assets in order to repay creditors.
According to a report the wholesale and retail industry reported as the third worst hit by insolvencies, seeing 2144 companies enter liquidation last year, a rise of 2.2%.
The sector was particularly vulnerable due to falling consumer spending warned by experts.
“Two sectors in particular are on high alert – retail and construction,” HW Fisher & Company’s insolvency partner Brian Johnson said.
Many high street brands suffered a poor Christmas amid lower levels of consumer spending and also continued Brexit uncertainity. The sharp slowdown in construction is putting extreme stress on building subcontractors – thousands are facing a large hit following the collapse of Carillion.
The signs are not good as there is a risk of further business failures. It is burning brightly on the Bank of England’s panel of economic warning lights.
While November’s rate of interest will rise and turn on the screws struggling companies, its full impact has yet to be fully felt.
“The Bank of England is acutely aware of the risk that hiking rates will push Britain’s army of zombie companies – the weak businesses being kept afloat solely by rock bottom interest rates – over the edge.”