Low interest rates helping firms survive

Richard Wolff of R3
Richard Wolff of R3
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The number of business insolvencies has fallen for the fourth quarter in a row and is now at its lowest level since 2007, according to figures released by the government’s Insolvency Service.

They show that there were 4,052 formal insolvencies in the first three months of the year, one per cent down on the previous quarter and 11 per cent lower than the same period a year ago.

Businesses are still benefitting from record low interest rates and, with inflation currently non-existent, they will probably do so for a while to come.

Richard Wolff

Richard Wolff, North West chair of R3 and Head of Corporate Recovery at JMW Solicitors, said: “Insolvency numbers are back down at pre-crisis levels.

“Businesses are still benefitting from record low interest rates and, with inflation currently non-existent, they will probably do so for a while to come.

Indeed, ‘non-flation’ will be helping them keep a lid on their outgoings.”

He added: “Low interest rates are however masking the fact that thousands of businesses would still struggle if rates were closer to historic norms.

“The insolvency figures also don’t include the thousands of businesses that are quietly removed from the Companies House register every quarter.

“Although most are inactive, others use it as a way to avoid the scrutiny of a liquidator and close down without repaying money to taxpayers and other creditors.”

The official insolvency figures show that all types of corporate insolvencies fell in the first three months except for administrations and compulsory liquidations, which were both up by nine per cent on the previous quarter, though were still lower than the same period a year ago.

Meanwhile the number of personal insolvencies decreased for the third quarter in a row to the lowest level in a decade.

A total of 20,826 people became insolvent during the first three months, down by nine per cent on the previous quarter and by 19 per cent on the same period a year ago.

The figures include people entering bankruptcy, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders.

Richard added: “Record low inflation will help relieve some pressure on those living at the edge of their means.”