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30 April 2019

Business woes continue as insolvencies rise yet again

Responding to the announcement that the number of businesses that became insolvent in the first three months of 2019 rose by 6.3% compared to the previous quarter, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said:

“These latest figures show the immense strain that small businesses are currently under with rising employment costs, unfair business rates as well as significant uncertainty as a result of the Brexit process.

“Both the total number of new company insolvencies as well as underlying total insolvencies have reached their highest levels since 2014, which highlights the ongoing turbulence that small firms are now up against.”

The labour intensive construction, administration and retail sectors, are all struggling with higher wages and employer pensions auto-enrolment costs were the areas with the most insolvencies.

The construction sector, which is notoriously dogged by late payments, has the highest level of insolvencies and was up 0.6% from the 12 months ending Q4 2018.

Mike Cherry added: “It’s good to see however that there was a fall of 8.9% in the number of self-employed individuals who suffered from bankruptcies in Q4 of 2018, but this remains higher than the same period in the year before.

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

“FSB’s own research has found that small businesses are spending around 15% more on the likes of taxes, levies and employment obligations than they were six years ago.

“Ongoing uncertainty is a critical issue for small firms and the self-employed, and central to this is the unknown nature of what the UK’s relationship will look like with the EU.

“SMEs are under the cosh more than ever and it’s time that action is now taken to prevent more businesses going insolvent in the future.”