A report by the Government’s Insolvency Service shows that the number of companies in England and Wales becoming insolvent has fallen to its lowest level in more than seven years.
Just 3,908 firms were declared insolvent over the last three months, which is the smallest number since the end of 2007.
Personal insolvency in England and Wales has also fallen. 18,866 individuals became insolvent between April and June – the lowest total since 2005 and a drop of 29.3% on the same period last year.
A growing economy and real-terms increases in wages have been cited as reasons for the fall in insolvency.
Phillip Sykes of insolvency trade body R3 said: ‘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.’
However, despite the drop in company insolvencies, Bank of England figures this month show a noticeable decline in lending to businesses. Total borrowing by UK non-financial companies fell by £5.5bn in June, which represents the biggest drop for four years. This compares with an average monthly increase of £0.2bn over the previous six months.