The number of companies and individuals that became insolvent has decreased for the fourth consecutive quarter, according to new statistics from the Insolvency Service.
With regards to companies, the total number of organisations slipping into insolvency fell to its lowest level since Q4 2007. The Insolvency Service attributes this drop primarily to fewer compulsory liquidations during the last 4 quarters, putting it at its lowest level since 2013.
Likewise, the total number of individuals who became insolvent was down to 2005 levels with the number of debt relief orders, individual voluntary arrangements and bankruptcies all decreasing.
“A sharp drop”
Commenting on the statistics, Phillip Sykes, president of the insolvency trade body R3, said:
“Record low interest rates and creditor forbearance have given businesses an easier time than might historically have [been] expected during the recovery after a recession.
“It has taken a long time, but with wages outstripping inflation again, people are finding it easier to repay their debts without resorting to insolvency procedures."
Jane Tully, head of insight and engagement at the Money Advice Trust, the charity that runs National Debtline, said:
“This steady downward trend in insolvencies is welcome news. We must be mindful, however, of what lies ahead. Household debt is forecast to pass its pre-recession peak of 169% of household incomes in 2020."