The number of companies falling into administration across England and Wales rose over the first quarter of 2018
The number of companies falling into administration across England and Wales rose over the first quarter of 2018, as fragile consumer confidence, rising costs and ongoing political and economic uncertainty conspired to increase the pressure on a number of sectors.
Analysis by KPMG of notices in the London Gazette shows that the number of companies entering administration jumped from 279 in the final quarter of 2017 to 345 in Q1 2018 – an increase of 66, and the largest quarter-on-quarter increase seen in a number of years. However, the tally was only a modest increase on the same period last year, which saw 327 insolvencies – indicative that Q1 is traditionally the busiest period of the year for insolvencies.
Blair Nimmo, head of restructuring for KPMG in the UK, commented: “With the first quarter of the year dominated by a number of high profile insolvencies, you would perhaps be forgiven for thinking that the economic winds had changed and that business failures were suddenly rife after years of relative stability. However, when put in the context of only a modest increase on the same period last year, it’s clear that we’re still operating in a relatively stable market. It’s certainly not all doom and gloom out there!
“What has been notable is that many of the corporate failures that we have witnessed in recent months have taken place in consumer-facing industries – whether that be retailers, both traditional and online, or companies spanning the full breadth of the food and drink sector, from food manufacturing to wholesale, and retail to casual dining. And you only have to look at this week’s BRC-KPMG Retail Sales Monitor to see that things haven’t got any easier for retailers over Spring.
“The reality is that companies in these sectors must evolve – and quickly - due to cost increases and changes in consumer spending habits due to pressures on household incomes squeezed by inflation and relatively stagnant wages. Many businesses rely on seasonal trends to boost sales across the year, but even so, some well-established brands have had to face significant branch closures in recent months as a result of those challenges.
Blair continued: “More broadly, general manufacturing, building and construction and logistics businesses also came under pressure over the quarter. However, the picture across many other sectors remained relatively static, ticking along at the historically low levels that have become the norm in recent years. It’s therefore perhaps too soon to call whether the activity seen during the first quarter is the start of more troubled times ahead.”
Looking at regional trends, the North of England saw the greatest number of insolvencies, with 113 administrations over the quarter. This compares with London, whose tally stood at 111 for the quarter. The Midlands saw 56 insolvencies; the South, 53; and Scotland, 12.
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