Insolvencies last month rose to the highest level since the Government began collecting the statistics four years ago, exceeding pandemic-era highs.
There were 2,457 companies declared insolvent last month, up 16% from March 2022, as well as 288 compulsory liquidations, double the figure from a year earlier. This, the Government said, was partly due to more winding-up orders from HMRC because of unpaid taxes.
PwC head of insolvency David Kelly said the figures showed that whether the UK can avoid a technical recession will be of little relief to business owners, who will be struggling either way.
“While there was some good news earlier this month that the UK avoided a technical recession, this has been of little comfort to businesses, many of whom are still struggling with adverse economic conditions,” he said.
Rising interest rates and inflation that continues to languish in the double digits have made it harder for companies to keep up with their payment schedules.
“Businesses are struggling to secure financing and pay off their loans due to high interest rates and the wider impact inflation and consumer sentiment is having on sales and cash flows, so company insolvencies will likely continue to rise in the short term, making for a challenging spring,” Kelly said. “This is particularly the case following the collapse of Silicon Valley Bank, which has caused lenders to reassess risk appetites.
However, he added that insolvencies should decline over the summer as hospitality rebounds.
“However, hard hit sectors like hospitality and leisure might soon begin to reap the benefits of the weather improving, so we hope to see the number of insolvencies in these sectors dip during the summer months, which will be a relief to pubs, restaurants and hotels who have struggled through the start of the year,” he said.
For individuals, the number of bankruptcies is still below pre-pandemic levels.
