New figures show rise in retail and construction insolvencies

Commenting on today's corporate insolvency figures released by the Insolvency Service, Graham Bushby, head of RSM Restructuring Advisory LLP said:

'A fall in the level of corporate insolvencies from quarter one to quarter two 2018 of 12.4 per cent is masking an underlying increase for the last 12 months of 12 per cent. 

'Yet again the primary industries that seem to be suffering are construction (2,764 insolvencies) and retail (2,197 insolvencies) which both showed the highest number of company failures over the last 12 months. 

'The issues surrounding the retail sector are well documented with many household names issuing profit warnings and closing locations. There's also an ever-increasing list of those undertaking company voluntary arrangements (CVAs) to try and survive. 

'Whilst having benefited from consumers seemingly happy to spend, it now appears that many households have also been living beyond their means. Yesterday's report from the Office of National Statistics showed that household expenditure is outstripping income for the first time in 30yrs. This is not sustainable and is unlikely to fill retailers with confidence.

'For the construction sector, despite a seemingly never-ending demand for new housing, not all is as rosy as it seems. Material prices have been increasing on the back of a weaker pound, and labour costs have also risen, due in part to Brexit. Meanwhile, property prices in many areas have started to flatten. This appears to be contributing to yet another increase in the level of failures in the sector.'