A growing number of UK companies are considering performance improvement and turnaround strategies, as the number of firms facing insolvency edges up, according to analysis by KPMG. The consultancy analysed notices in the London Gazette and found that 302 UK companies entered administration in the third quarter of this year – a slight increase from 297 in the previous quarter and 295 in Q3 2016.
KPMG's Blair Nimmo commented: “Since the middle of 2016, we’ve seen a fairly steady rate of companies falling into insolvency, with quarterly figures typically hovering around the 300 mark. While this is very much reflective of the benign economic climate we’ve seen in the UK over the last 18 months, here at KPMG we have started to see an increase in the number of conversations we’re having with businesses around performance improvement and turnaround strategies.”
KPMG noted that the first half of 2017 had been challenging for UK retailers but, despite some stable results over the summer, many companies now face their busiest time of year in the last quarter. Nimmo added: “Sectors that do appear to have undergone a degree of stress over the quarter include building and construction, manufacturing and interestingly, companies who offer recruitment and temporary manpower services – perhaps emblematic of the low unemployment rate currently seen across the UK economy.”
4 challenges for corporate confidence
Some of the factors that could be negatively affecting consumer and corporate confidence include:
- the current uncertain political climate on Brexit;
- the weak exchange rate;
- a rise in interest rates for the first time in a decade; and
- inflation, at 3 per cent, at its highest level in five years.
Nimmo said: “It will therefore be interesting to see whether the next couple of quarters start to witness a more stark increase in corporate failures.”
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