Ask anyone and they will tell you that it is not easy to be in business right now. As the world economy emerges from one recession and appears poised to enter another, companies around the world are struggling to put their foot on the gas and really accelerate growth. It is a situation that is not helped by the instability in Europe and East Asia, but has it affected the number of company insolvencies in the UK? Let’s take a look at the numbers for England and Wales.
First of all, it is important to note that the Office for National Statistics recently published a revision of its figures following a human error that meant that the figures were tabulated incorrectly. For this analysis, we will use your updated figures (seasonally adjusted), extracted from the Insolvency Service and the Casa de Empresas.
Looking back at 2007 (the first full year for which the Government provides information) we can see that in England and Wales, there were a total of 15,866 company insolvencies throughout the year. That’s 92 more than they previously posted, but it represents a significant low for company insolvencies in the almost decade that followed. 2007 was the last year before the 2008 global financial crisis, and that’s reflected in the numbers.
As the world economy contracted, a total of 21,072 companies were forced into insolvency, a surprising jump from the previous year. Things only got worse in 2009, as they jumped back to 24,010 when companies that had held out for the initial year of the recession finally collapsed under their weight. From there, however, we are witnessing a period of relative improvement in the number of bad debts. 2011 brought a drop to 19,796, which was followed in 2011 by a small increase to 20,285 before dropping to 19,350 in 2013, 17,681 in 2013, and then to 16,317 in 2014.
For 2015, the government is only supplying the first two quarters, although the figures look extremely promising given, surpassing even pre-recession figures. For the first quarter, the UK had 3,837 company insolvencies compared to 3,933 in the first quarter of 2007. The second quarter is a similar story, with 3,701 companies becoming insolvent compared to 3,987 in the same 2007 period.
Therefore, the data available to us indicates a steady decline in the number of insolvencies in England and Wales following the global recession. Therefore, it is clear that company insolvencies are not increasing. However, they are subject to the vagaries of the economy and therefore can rise with any sudden downward change.