The number of business liquidations registered in 2013 fell to the lowest level for six years, according to statistics released by the Insolvency Service.
14,982 companies went into liquidation last year – a 7.3% drop from 2012. David Birne, insolvency partner at chartered accountants HW Fisher, said:
“These are the best insolvency figures we’ve seen in a while. But with many of Britain’s businesses still just ‘hanging on’, thousands of our weaker firms are far from out of the woods yet.”
Business liquidations hit a record high in 2009 after the banking crisis, with over 5,000 companies liquidating in the first quarter alone.
Although the levels have reduced, they are still high in comparison to before 2008, when fewer than 13,500 companies went into liquidation per year.
There are fears that the numbers have been artificially reduced due to record low interest rates and banks being more lenient about cash flow problems.
As growth continues, interest rates will inevitably rise, potentially causing serious problems. Giles Frampton, vice-president of insolvency trade body R3 said:
“Recent R3 research found that 96,000 businesses would be unable to repay their debts if interest rates were to rise, while 166,000 businesses said they were having to negotiate payment terms with their creditors.”