Economy remains fragile as insolvencies rise: Q1 2011

The Insolvency Service today released statistics for insolvencies in the first quarter of 2011 which demonstrated the continued fragility of the UK economy. There were 4,121 companies that entered into insolvent liquidation, which was an increase of 3.7% on the previous quarter. The retail sector, with some notable exceptions, continues to struggle as individuals reign in their purse strings. Whilst banks are generally supportive of existing business customer’s borrowings, new credit lines remain difficult to come by. Those businesses reliant on the public sector are now feeling the impact of public sector cuts and other statistics released on Tuesday show the manufacturing domestic sector also appears to be running out of steam with lower orders and higher output prices.

There were 30,162 individual insolvencies in the first quarter of 2011, a decrease of 15.5% on the same period a year ago. This reduction is likely to be attributed to individuals controlling their spending. Should interest rates increase later in the year we could see both the corporate insolvency figures rise steeply.