The number of companies going into administration has fallen to the lowest amount since 2005, according to statistics from the Insolvency Services.

There were 410 insolvencies in Q2 this year, compared to 630 in the same period last year, meaning a fall of 34.9%.

The number of companies entering creditors’ voluntary liquidation also decreased 18.1% to the lowest level since Q1 2008.

Despite this, the Institute of Chartered Accountants (ICAEW) warn that a rise in interest rates could result in a sharp rise in insolvencies.

Clive Lewis, head of enterprise at the ICAEW, says that growth in trade is still slow, leaving many companies teetering at the brink.

He said:

“Businesses expect most growth over the next year to be domestic sales rather than exports, so this is not a trade-led recovery.

“In addition, many businesses report that availability of skills is a greater challenge than a year ago. The inability to acquire suitably-skilled staff may act as a cap on growth, holding back economic performance.”

However, other financial experts believe that companies will remain resilient, even if interest rates rise.

Melissa Jackson of Carter Backer Winter told Economia:

“Businesses have got into the habit of surviving.  An interest rate rise may make a tight situation even tighter, but the majority of businesses will continue to fight on.”

The picture is very different for personal insolvencies, which have risen for the first time since June 2010.

Image by Trey Ratcliff