This month sees Companies House release their final monthly statistical release of Incorporated Companies in the United Kingdom.
The report is changing to a quarterly publication after a review by Companies House. Since it’s beginnings, the monthly statistical review has been a regular reminder of the health of UK companies, and has shown increases and decreases in company populations through times of economic hardship and prosperity.
The report highlights the decrease in companies registered in the UK during the time of both the last recession and the introduction of the Companies Act 2006, the final provision of which came into force in 2009. During this time, the total register of companies in Great Britain decreased by 132,000 as significant changes to the register took place, including a purge of companies who had spent an ‘extended period in the process of dissolution or liquidation’.
Further statistics released in the report show there were 53,949 incorporations and 40,882 dissolutions in the UK in June, causing the number of companies on the Total Register to reach 3,741,883. The total register size has increased by 697,173 between April 2013 and July 2016, with the biggest spike in increase taking place April 2016.
Liquidation Rates at All Time Low
Following on from the publication from Companies House, at the end of July, The Insolvency Service released their own statistical review of new corporate and individual insolvencies in England and Wales, and related statistics for Scotland and Northern Ireland between April and June 2016.
Findings from the review include:
- Total company insolvencies were lower than the previous quarter, and also decreased on the year; this decrease was mainly driven by a decrease in compulsory liquidations
- Other types of company insolvency (administrative receiverships, company voluntary arrangements, etc.) remained fairly stable
- Total individual insolvencies increased for the fourth consecutive quarter, driven primarily by an increase in individual voluntary arrangements
Debt relief orders also increased, because of a change to the eligibility criteria.
Overall there has been a decrease in Company insolvencies in England and Wales, with an estimated total of 3,617 companies entering insolvency in Q2 2016, which was 4.2% lower than Q1 2016 and 2.7% lower than Q2 2015.
In Scotland, however, insolvencies have increased in Q2 2016, with estimated 258 total company insolvencies, an increase of 15.7% compared to Q2 2015. Of these, 167 were company liquidations – a 39.2% increase on the same quarter of 2015.
There were an estimated 112 company insolvencies in Northern Ireland in Q2 2016, 41.8% more than the same quarter in 2015. Of these, 71 were compulsory liquidations (up 77.5% on the same quarter last year), and an estimated 28 were creditors’ voluntary liquidations (CVLs, up 16.7%).
In Q1 2016, the five industry sectors with the highest number of new company insolvencies were construction, wholesale and retail trade, repair of motor vehicles and motorcycles, administrative and support service activities, accommodation and food service activities, and manufacturing. These five have had the highest numbers of insolvencies (though sometimes in a different order) each quarter since the 12 months ending Q1 2012.
The liquidation rate was at its lowest level since comparable records began. The estimated liquidation rate in the 12 months ending Q2 2016 was 0.42% of active companies, the lowest level since comparable records began in Q4 1984.
The outlook for companies in the UK
Broadly speaking, the results from the Q1 2016 are following patterns which have emerged over the course of previous quarters in recent years, showing a steady recovery since 2008 and the number of companies registered in the UK is continuing to rise. As the results are covering the period immediately before the Brexit vote at the end of June, the next publication of these will no doubt make interesting reading.
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