Corporate and personal insolvencies are on the rise against the backdrop of a worsening economic outlook.
Latest figures from the Insolvency Service show that in August corporate insolvencies in England and Wales rose by 41.6% compared with pre-pandemic levels in August 2019, while personal insolvencies rose by 7.4%.
Corporate insolvencies increased by 5.5% in August 2022 to a total of 1,933 compared to July’s total of 1,832, and increased by 43.4% compared to August 2021’s figure of 1,348.
Corporate insolvencies also increased 41.6% from August 2019’s total of 1,365. Personal insolvencies increased by 4.1% to 9,572 in August 2022 compared to 9,198 in July, and were 5% higher than August 2021’s figure of 9,117. Personal insolvencies also increased 7.4% from August 2019’s total of 8,910.
Charlotte May, Wales chair of insolvency and restructuring trade body R3, said: “The monthly increase in corporate insolvencies – to the third highest set of monthly statistics since January 2019 – has mainly been caused 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 reflect the continued toll the sustained economic turbulence is taking on businesses. 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.
Ms May who is associate director for Manolete in Wales and the south west of England ,said of the rise in personal insolvencies: “Right now, many people are worried about money, with the increasing costs of fuel, food and energy key concerns as wages lag behind inflation.
“This concern about the cost of living is making many people reluctant to make major purchases and spend on anything other than the basics. Borrowing and credit card spending have also increased as people are, worryingly, turning to these to cover their costs. “We urge anyone in Wales who is worried about their business or personal finances to seek advice as soon as possible.”
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