According to chartered accountants and business advisors Moore (www.moore.co.uk), the number of manufacturing businesses entering insolvency has hit a five-year high, rising by 7% to 1,466 in the year to 30 September 2019 — up from 1,373 the previous year.

The company also said that UK manufacturing orders fell in October for the sixth consecutive month.

Moore says that the continued lack of clarity on Brexit is causing increased levels of concern about the future financial requirements that companies may require.

“In the manufacturing sector, this has resulted in an increase in the number of UK-based customers of these businesses deferring making significant purchases.

"There are also concerns in the sector that some European companies are looking to cut UK-based manufacturers out of their supply chains in order to guard against the impact of a possible no-deal Brexit; and while the fall in the value of sterling should have made UK exports much cheaper for foreign buyers, it has been largely offset by increased input costs for UK manufacturers, who themselves buy in components from overseas.”

Robert Branch, managing partner at Moore South West, added: “UK manufacturers should be going through a period of heavy investment in order to close their productivity gap with competitors in places like Germany.

"Instead, many are having to save as much cash as they can to tide them through until order books recover, as banks and other finance houses are indicating that they will be reluctant to provide additional funding to support working
capital.

"Moreover, some manufacturers are choosing to liquidate their businesses now instead of continuing to operate and potentially facing compulsory insolvency.

"Business owners increasingly see selling assets and shutting down as a better option than continuing to lose cash while hoping for a recovery in their fortunes.”