Insolvency Risk Grows For UK Businesses

The end of 2017 brought a gloomy conclusion for UK businesses as insolvency restructuring trade body R3 found that a third of the companies involved in its survey had a higher than average risk of insolvency.  

This represented an increase of a quarter at the beginning of 2017 and casts some doubt over the underlying health of an economy facing some significant head winds in 2018.   

R3 use financial data and other performance indicators gathered from 3.6 million businesses in its assessments. The businesses most likely to face an increased risk of insolvency were IT, transport and haulage and professional and outsourcing services.  

The risk for IT firms has risen to 39.8% from 33.5% in January 2017. The long drawn out Brexit negotiations and the mood of uncertainty around them have been blamed for the elevated risk of insolvency in the businesses analysed.  

Inflation and fluctuations in the value of sterling have also increased pressure making conditions tough for businesses in some sectors.    

The number of individuals registering as insolvent also increased in the third quarter of the year. Rising prices in the shops will only increase the pressure on household budgets in 2018, which could push up insolvency risk even further.