Rise in business insolvencies reflects challenges ahead

Allan Cadman

The toll of the economic turbulence taking place is reflected in an increase in the number of business insolvencies.

New statistics show there were 1,933 corporate insolvencies in August – 43% higher than in August last year and 42% higher than in August 2019.

The figure was also 5.5% higher than July this year.

Allan Cadman, North West chair of the insolvency and restructuring trade body R3, said the increase had mainly been caused by a rise in the number of Creditors’ Voluntary Liquidations, a process in which directors close their company voluntarily.

“The figures suggest 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,” he said.

“These figures will be a sobering reminder to government of the scale of the challenge facing the UK economy as we head into the winter months, and reflect the continued toll the sustained economic turbulence is taking on businesses.”

He added: “Companies are facing enormous running cost hikes just as household spending is facing its biggest squeeze in several decades which delivers yet another blow to business owners who were hoping to bounce back to normal trading levels post-pandemic.

“Many directors and managers are worried about the rise in prices and energy costs and the effect these will have on their margins and profits, and this is set to continue to be a concern.”

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