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UK Endures Q1 Insolvency Spike


U.K. business insolvencies are up, according to new analysis from Hudson Weir.

The London-based insolvency firm released the latest data this week and called attention to the construction, retail, and food and drink sectors as some of the hardest-hit. According to Hudson Weir, 3,967 companies stopped trading in the first quarter of 2017, a 4.5 percent increase compared to Q4 2016 figures.

More than 16 percent of those closures occurred in the construction industry; 13.2 percent were in the food and beverage space.

Analysis said the reasons for these insolvencies are “complex,” and range from “unrealistic planning through to fraud and unforeseen loss of marketshare.” More than two-thirds of the quarter’s insolvencies were voluntary. Hudson Weir did not one commonality across the trend: inadequate cash flow.

“Our experience in terms of the types of companies we are liquidating is borne out by the statistics. It’s a different world now – in terms of political and economic events it’s probably the most uncertain time since the Second World War,” reflected Hudson Weir director Hasib Howlader in a statement. “It’s no surprise that certain industries have been hit – construction is bound to suffer because people had less of an appetite for risk than before.

“Retail is also bound to suffer because we are still feeling the effects of Brexit and the associated exchange rate movements – many important goods are now significantly more expensive than they were,” Howlader added. “It sounds obvious, but we’d recommend not borrowing unnecessarily. Also, as and when you are in a position to hire, it’s crucial you get it right.”

He added that companies will often underestimate the impact a bad hire may have on company finances: one bad hire could weigh heavily due to lost wages, money spent on training, recruiters’ fees, and more.

“These are the hidden costs that companies often underestimate and it ends up costing them,” Howlader added.



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