Midlands insolvencies soar as economic conditions bite

Tougher economic conditions are taking their toll on local businesses, with increasing numbers closing down voluntarily as trading conditions become untenable, according to new figures.

The warning comes from the Midlands branch of insolvency and restructuring body R3 and follows latest statistics published by the Insolvency Service which show that corporate insolvencies in England and Wales increased by 5.5% in August 2022 to a total of 1,933 compared to July’s total of 1,832, and by 43.4% compared to August 2021’s figure of 1,348.

August 2021’s corporate insolvency numbers were also 41.6% higher than the August 2019 figure of 1,365.

R3 Midlands chair Eddie Williams, a partner at PwC in the East Midlands, said: “The monthly increase in corporate insolvencies – to the third highest set of monthly statistics since January 2019 – has been caused mainly by an increase in the number of Creditors’ Voluntary Liquidations.

“This suggests that directors remain concerned about their ability to continue to trade in the current climate and are choosing to close their businesses before that choice is taken away from them.

“These figures will be a sobering reminder to the UK government of the scale of the challenge facing our local economy as we head into the winter months. Companies are trying to overcome enormous running cost hikes just as household spending is facing its biggest squeeze in several decades.

“All of this delivers yet another blow to business owners who were hoping to bounce back after the pandemic to normal trading levels.”