Brexit alarm sends business closure levels to their highest in five years
- Number of liquidations increased by 10% in the last year, figures show
The number of businesses being wound up has soared to the highest level for five years as firms fight to deal with rising interest rates and Brexit disruption.
The total number of liquidations – when businesses are closed rather than restructured through an administration process – jumped by 10 per cent to 14,270 last year.
Firms have been hit as healthier companies reduce orders to preserve cash in case the economy worsens.
Researchers said this meant 2018 was the worst year for liquidations since 2013 when the UK was still emerging from the financial crisis.
Duncan Swift, a partner at accountant Moore Stephens which conducted the research, said: ‘The recent slowdown is leading to more business closures rather than just business restructuring.
‘Many small businesses are struggling to stay in operation as they are unable to cover what might only be short-term gaps in their order books.’
The squeeze has hit a growing number of so-called ‘zombie’ firms – companies clinging on to survival but which are only managing to service interest payments on debts rather than pay them off.
Swift added: ‘Unfortunately many of those businesses are already so financially stretched that they are just the kind of businesses most lenders want to avoid.
‘If there was some clarity on the final Brexit deal then we could see a bounceback in order books.’
The number of compulsory liquidations – those following a winding up by court order – totalled 3,120 in 2018, while 11,150 firms were closed voluntarily by bosses.