Small businesses feeling the pressure as insolvencies rocket

Mike Cherry of the FSB
Mike Cherry of the FSB

The number of corporate insolvencies rose by 10 per cent in real terms in 2018 compared to the previous year, according to figures released today by the government’s Insolvency Service.

There were 16,090 business insolvencies during the year in England and Wales and according to R3, the trade body for insolvency practitioners, insolvencies numbers have now crept back up to levels last seen in 2014.

The North West R3 chairman Paul Barber, a partner at Begbies Traynor, said: “The pressure point for businesses most frequently cited by our members is weak consumer demand. People just don’t have much spare cash at the moment, reflected in the rise in the number of personal insolvencies.

“Although recent government figures showed that the weekly amount spent by households has hit its highest level since 2005, much of that expenditure went on housing and transport, with less left over for consumer outlay.”

Federation of Small Businesses national chairman, Mike Cherry, said confidence levels among SMEs were at the lowest levels since the financial crash.

He said: “These latest figures show the huge strain that small businesses are currently facing with rising employment costs, unfair business rates as well as significant uncertainty as the UK exits the European Union.

“This illustrates the great turbulence that small firms are now up against. It’s a great concern to see almost 1,000 self-employed individuals suffered from bankruptcies in Q3 of 2018.

“The self-employed community, which is 4.8 million-strong, are still denied basic support in too many areas.

“Our latest figures have found that small businesses are having to spend 15 per cent more on the likes of taxes, levies and employment obligations than they were six years ago.

"These factors, amid the ongoing uncertainty as to what the UK’s relationship will look like with the EU after the 29 March 2019, mean that SMEs are under the cosh more than ever and it’s time that action was taken to prevent more businesses going insolvent in the future.”