The number of companies entering insolvency to deal with debt problems has risen to a four-year high, as uncertainty around the shape of the final Brexit deal puts a freeze on cash flow.
The underlying number of company insolvencies increased to 16,090 in England and Wales last year, the highest level since 2014, UK government statistics show.
Excluding one-off ‘bulk insolvency events’, seasonally adjusted corporate insolvencies in 2018 rose 10% from 2017.
“It has also prompted some companies to stockpile, putting a squeeze on cash flow and reserves,” said Stuart Frith, president of R3.
“Government proposals to give itself priority status for repayments in insolvencies may well have a negative impact on the ability of small businesses to finance themselves this year,” he added.
“With uncertainty in the supply chain, many businesses will be seeking to increase their stock levels to counteract this and will require new finance to do so. But if funders are concerned that the government will take a bigger cut if things go wrong, then lending decisions become much harder.”