Fewer firms going bust than at any time since the Thatcher boom

THE number of companies going bust has fallen to its lowest level in 26 years, since the height of the late 1980s boom under Margaret Thatcher.

The total number of failed firms fell 10.3pc year-on-year in the final quarter of 2015, according to the latest Insolvency Service figures, to 14,629, demonstrating continuing resilience in the face of international headwinds. There was a marked decrease in compulsory liquidations, to the lowest annual total since 1981, as the UK shrugged off the remaining effects of recession.

Companies going into administration fell by 11.4pc from the previous year to 1,406, the lowest in 11 years.

“The rate of GDP growth may have slowed but the economy is still in pretty good shape,” said Glyn Mummery, partner at restructuring firm FRP Advisory. “Over the past six years the number of company insolvencies has been in overall decline in line with economic recovery.”

The last time that company insolvencies dropped to similar levels was in 1989 when Nigel Lawson was chancellor in the Thatcher government.

Personal insolvencies also fell last year, to the lowest level since 2005.

A total of 79,965 personal insolvencies were recorded, down by nearly a fifth from the previous year. But the number of debt relief orders (DROs) – writing off individuals’ debts of £20,000 or less – has surged.

“There is still an underlying debt problem for a large number of households, which is masked by the continued fall in personal insolvency numbers,” warned Mark Sands, a partner at accountancy firm RSM. “The increased accessibility of DROs combined with a shift in attitudes among creditors – more widely accepting unofficial payment plans – has seen an overall reduction in the more severe procedures like bankruptcies.”

Economists warned that weak construction along with high household debt and stock market turmoil signal tough times ahead this year. Ian Gould, business restructuring partner at ac- countants BDO, said: “A falling stock market and the ongoing Brexit debate will continue to put doubt in the mind of British businesses. The introduction of the higher minimum wage in April 2016 is likely to be felt very keenly.

“Add to that the impact of increasing business rate costs and it becomes clear that many businesses are likely to face difficult decisions over the coming 12 months.”