Administrations down 16.4% as the stronger players survive
The number of businesses falling into administration dropped by 16% to 1,224 for the first nine months of the year, according to figures from Deloitte. This time last year 1,464 businesses had entered administration, compared to 1,581 in the first nine months of 2011.
Positive news is apparent in the construction industry (building related and real estate services) which recorded a drop of 30.5%, from 347 appointments to 241 compared to the first nine months of 2012. Hospitality and Leisure, including hotels, restaurants, pubs and leisure providers, recorded a decrease of 24.6%. Administrations in the retail sector dipped by 9.6%, from 157 appointments for the first nine months of 2012, to 142 today.
Lee Manning, restructuring partner at Deloitte, comments: “These statistics indicate how a ‘clearing out’ of underperformers has given way to a rebalancing of supply and demand. The number of administrations is a key indicator of the health of trading businesses, so this data is encouraging.
“Construction has clearly benefitted from more activity in the housing sector as demand and prices pick up. Leisure has seen fewer collapses due to a weeding out of the poor performers rather than an increase in discretionary spend for consumers. Overall, London saw the largest number of administrations with 316 appointments, followed by the North West with 272 appointments so far this year.
“Expansion is now a higher priority for CFOs than cutting costs and building up cash according to our latest CFO survey. Therefore over the longer term, further decreases in insolvency are likely if the outlook for growth in the UK improves. Indeed, if you take the official figures, administrations have been falling year on year since the end of 2008.”