Brexit: UK businesses increasingly at risk of insolvency

A third of companies have a 'higher than average' risk of insolvency, up from a quarter at the beginning of the year

Exchange rate fluctuations and Brexit led uncertainty has fuelled insolvency (AFP/Getty)

The number of UK businesses facing the risk of insolvency grew over the course of 2017, insolvency and restructuring trade body R3 said on Tuesday.

The study, drawn from a database of 3.6 million companies using performance indicators including balance sheets and directors’ track records, showed the highest growth in risk in the technology sector.

The figures come as companies face rising inflation, exchange rate fluctuations and uncertainty, all exacerbated by protracted Brexit negotiations.

R3 said a third of all the companies it studied were in its “higher than average risk” band in December, up from a quarter at the beginning of the year.

It did not give details how the bands were calculated, or say how many firms were in each.

The percentage of IT firms with a higher-than-average risk of insolvency rose to almost 39.8 per cent in December from 33.5 in January.

Higher levels were also seen in the transport and haulage, professional services and outsourcing sectors.

Government data earlier this year showed the number of people registering as insolvent in England and Wales hit a five-year high in the third quarter.

Debt charities and the Institute of Chartered Accounts in England and Wales (ICAEW) warned that the latest sharp increase indicated wider problems in Britain’s consumer-led economy.

Reuters