Rise in administrations illustrates business nervousness

Last year ended on a challenging note for many businesses, with the total number of companies in England and Wales entering into administration during the fourth quarter on the increase, according to analysis by KPMG

The firm’s study of notices in the London Gazette shows that a total of 368 companies went into administration between October and December 2018, compared with 322 in the previous quarter; an increase of 14%, and a significant increase on the 277 administrations seen during the same period in 2017.

Blair Nimmo, head of restructuring for KPMG UK, described the annual and quarterly increase in the number of businesses becoming insolvent as ‘disappointing but by no means surprising’, citing the lacklustre festive trading period for many companies.

‘We continue to see retailers and casual dining chains in the headlines with various high profile insolvencies coming to the fore in recent weeks, as they fight to keep pace with changing consumer habits, reduced consumer confidence and increasing cost pressures. This in turn has also impacted supply chains, particularly those in the FMCG sector, which saw insolvencies increase by over a third in the final quarter,’ Nimmo said.

Nimmo said throughout January KPMG noticed an uplift in general restructuring activity from companies requiring assistance in the generation of additional funding in response to a difficult trading environment.

‘There is undoubtedly an increased nervousness for the business community, which has only been amplified by the current political environment.

‘While political and economic uncertainty means most businesses are adopting an extremely cautious approach to any form of investment, with the right approach, businesses with sound plans, balance sheets, funding and leadership, are in a position to take advantage of the current climate,’ he said.

Report by Pat Sweet

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