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Insolvencies soar

ended 07. October 2022

Looking for quick comment on the following bleak data published this morning relating to company insolvencies:

  • Total company insolvencies in England and Wales in the second quarter of 2022 reached their highest quarterly level since Quarter 3 (July to Sept) 2009, driven by Creditors' Voluntary Liquidations (CVLs).
  • Insolvencies decreased in 2020, when government support to businesses was in place during the coronavirus (COVID-19) pandemic; average quarterly insolvencies since Quarter 1 (Jan to Mar) 2020 are slightly lower than the 2015 to 2019 average.
  • More than 1 in 10 UK businesses reported a moderate-to-severe risk of insolvency in August 2022.
  • During the same period, 22% of businesses said energy prices were their main concern, which is an increase from 15% in late February 2022; in firms with 10 to 49 employees, the figure was 30%.
  • In England and Wales, construction, manufacturing, accommodation and food service activities, and wholesale and retail trade industries together accounted for more than half of total business insolvencies in the first half of 2022.

4 responses from the Newspage community

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Editor
Sam Alsop-Hall
Chief Strategy Officer at Clive Henry Group
The current headwinds facing the economy, coupled with the level of debt carried by companies from Bounce Back or CBILS loans now being compounded by rising energy and staffing costs, the number of insolvencies is only going to get worse. 2023 is shaping up to be an economic catastrophe.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This is clear evidence that whilst the Tory party were indulging in a protracted leadership contest, they were allowing companies to get into trouble with all the uncertainty surrounding soaring energy bills and sky high inflation. The government acted far too slowly and their policies are far too timid. More businesses will go to the wall due to the dire economic conditions that have been self-inflicted by a totally incompetent leadership team.
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Ed Rimmer
CEO at Time Finance
Not only are insolvency figures rising to their highest levels in over a decade, but viable firms are bearing the brunt of rising energy and labour costs, slower economic growth and rising inflation. Our recent survey found that 80% of business owners feel the greatest financial pressure from rising costs and 50% believe tailored financial support would help them to relieve that pressure. With more and more companies forced into financial strife, insolvencies will continue to rise beyond the natural business cycle and this will create further issues for our economic recovery and growth.
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Marcus Wright
Managing Director at Bolton Business Finance
Government support measures during Covid kept company insolvencies abnormally low in 2020-2021. Although this helped many businesses survive, what we have now is a large number of unviable businesses close to going under. The final nail in the coffin is now coming from soaring energy bills and also a renewed action from HMRC to collect debt. I expect the worst is yet to come with company insolvencies likely to hit record highs in the next 6-12 months. There is utter carnage ahead for the economy.