According to the latest insolvency statistics, the number of corporate insolvencies has hit a five year high for businesses within the manufacturing, retail, and hospitality industries.
In the past year, 7% more manufacturing companies have entered insolvency, making 1,466 in total.
Brexit-related uncertainties, as well as a broader slow-down across Europe, have been cited as partly to blame according to reports. Due to a lack of clarity on Brexit, many customers are deferring decisions on buying goods which is causing manufacturers to save their cash rather than invest it until the order books recover.
While in an ideal world UK manufacturers should be investing heavily in order to increase productivity up to competitors’ levels, what we are actually seeing is banks and finance houses indicating a major reluctance to provide any additional funding.
Pub and Bar Insolvencies
530 companies which run licensed venues closed last year, which is a 13% increase on the previous year. This increase seems to have been driven by “soaring costs and a gradual weakening of consumer confidence”.
There has been a shift in the drinking habits of younger consumers leading to those businesses that don’t adapt their approach seemingly falling by the wayside.
Many younger drinkers opt to consume less alcohol, instead looking to bar and pub establishments that offer healthier options, more non-alcoholic options, better food offerings and experiential venues such as electronic darts and bowling.
Some businesses which are looking to refurbish or develop a food offering are facing difficulties finding lenders to assist due to Brexit uncertainty but on a more positive note, Chartered Accountancy firm Gerald Edelman has predicted that pubs which do find the funds to develop a “focus on food would drive growth in the sector past the £19bn mark in the coming twelve months”.
Retailers have also been continuing to struggle this past year with data from The Insolvency Service showing there were 1,252 retail insolvencies in the last year compared with 1,232 in the previous year.
Retail insolvencies have hit the headlines a great deal over the past twelve months with big names such as Mothercare, Bonmarché, Links of London, and Karen Millen all becoming insolvent.
Much of these troubles can again be partly blamed on the lack of available funding from lenders, combined with the minimum wage increase and continued rise in popularity of online shopping. Our behaviour as consumers continues to change and if retailers do not adapt then will suffer.
While some may also put the blame on Brexit uncertainty, retailers across Europe are also struggling so this is certainly not the sole cause. By way of example, Vodafone is planning to close approximately 1,000 of its stores in Europe.
At Farleys we can provide a wide variety of advice and representation on insolvency matters. Whether you are the company who is in financial difficulties or whether you are owed money by a company, we can provide you with practical advice. Call the team today on 0845 287 0939 or contact us by email.