More bad news for the UK economy as liquidations are on the rise.

 There were 3,560 compulsory liquidations in England and Wales in Q2.

The National Statistics Institutes has just released figures showing that compulsory liquidations and creditor’s voluntary liquidations (CVLs) are up 11.6% on the previous quarter and an increase of 15.0% on the same period a year ago.

An upward trend in liquidations has been recorded since the end of 2007, and the upward spike on last quarter would correlate to the deepening economic slowdown.

Companies going broke can be seen as one of the firmest indicators that the economy is in troubled times.

However, it must also be noted that the number of liquidations, while trending higher, are nowhere near the peak recorded in the later half of 2003 where close on 4,500 liquidations were recorded.

However there were 24,553 individual insolvencies in England and Wales in the second quarter of 2008 on a seasonally adjusted basis. This was a decrease of 2.0% on the previous quarter and a decrease of 8.3% on the same period a year ago.

This was made up of 15,297 bankruptcies, a decrease of 1.3% on the previous quarter and a decrease of 5.7% on the corresponding quarter of the previous year, and 9,256 Individual Voluntary Arrangements (IVAs), a decrease of 3.2% on the previous quarter and a decrease of 12.4% on the corresponding quarter of the previous year.

For bankruptcy orders there has been a pronounced shift towards debtor’s petition bankruptcies and away from creditor’s petitions in recent years.  By the second quarter of 2008, 84% were made on the petition of the debtor.   

The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) has fallen from 61% in 1995 to 12.1% in the first quarter of 2008 (second quarter 2008 figures for trading-related bankruptcies are not yet available).

It should be noted, however, that figures for 2007 onwards are based on a revised classification and are not entirely consistent with earlier years figures.

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