Debt owed to UK businesses £580m higher in first three months of 2018

After falling to a 12-month low in final three months of 2017 with £157.9m being filed, bad debt filed in the first quarter of 2018 reached £738.7m, a rise of 366.1 percent year-on-year.

Creditsafe’s Watchdog report is drawn from analysis of farming and agriculture, construction, banking and financial, hospitality, it, manufacturing, professional services, retail, utilities, transport and wholesale sectors.

According to the report, the rate of failure among UK construction firms increased by more than two thirds (73.3 percent) in the first three months of 2018, with 934 firms falling into receivership.

The number of county court judgements (CCJs) also rose in the last three months compared to the previous quarter by 23 percent to 18,781. However, the average value of each CCJ dropped by 10.7 percent to £3,073.

It was found that the number of companies that had failed over the last three months had risen by 28.3 percent to 4,567. This included Carillion, which went into liquidation in January with a turnover of over £6.5bn and Toys R Us, which entered administration in February with a turnover of £418m.

“High profile corporate collapses and scandals in the last three months have been costly and undermined confidence in UK business,” said Cato Syversen, CEO of Creditsafe. “It’s particularly disappointing following the previous three months, where we reported a fourth quarter rise in sales and fall in bad debt.

“In the last three months, we have seen more than 1,000 companies fail, a rise of over a quarter. Following the collapse of Carillion, the construction industry saw a fall in sales of 6.2 percent, a rise in debt owed to the sector of £4.3m, a 73.3 percent increase in company failures and 484 more CCJs. That is just the short-term impact in one sector. We are seeing similar challenges across other industries and it’s a waiting game to see what the mid to longer term future will deliver.”