More UK firms went bust last year than prior to the pandemic, with the worst affected areas seeing a fivefold increase. Withdrawal of government support and soaring energy costs have been blamed for the rise, with retail and construction the hardest hit industries.
The revelations have come from research by the BBC, which analysed insolvency notices in The London Gazette, the official paper of record for public notices. A total of 187 out of 221 upper tier authorities in the UK (85 per cent) saw a rise in liquidations comparing 2019 to 2022.
Havering, in London, saw the largest percentage increase of insolvencies of any local authority area, when limiting it to those which had at least 50 between 2019 and 2022.
There were 40 in the area in 2019, but the total shot up to 215 in 2022 - an increase of 438 per cent.
In Southend-on-Sea the number rose from 51 in 2019 to 240 last year, which is an increase of 371 per cent. Construction and high street businesses were hit the hardest last year.
An additional 943 construction firms went bust in 2022 compared to 2019.
Meanwhile, an additional 820 wholesale and retail firms went out of business last year compared to 2019.
Both Havering and Southend suffered from a collapse in smaller construction firms.
In total, 82 of the 215 businesses to go bust in Havering (38 per cent) were related to construction. In Southend, that figure was also high at 28 per cent.
Some areas, such as Derby, lost out because of the changing face of the high street.
More than a third (34 per cent) of the 2022 losses in Derby were felt on the high street in either retail, hospitality or hairdressing.
Insolvency expert Julie Palmer said: “There's a lot of nervousness in the economy at the moment due to macro-economic pressures. With interest rates, they are still not high in relative terms, but high in terms of how this generation perceives them, together with inflation that until recently seemed to be galloping out of control.
“This has caused a real cost of living crisis, which is really hitting consumer confidence. People are tightening their belts and it's particularly those consumer-facing sectors, that we're really beginning to see struggle at the moment.
“We are seeing rising levels of distress that's beginning to translate in terms of a pickup in insolvency rates. We haven't seen that massive falling off the cliff edge yet, but I think some factors will speed up that process a little bit.
“The courts are progressively beginning to push through some of the credit applications to take recovery action and HMRC (His Majesty’s Revenue and Customs) is definitely getting a lot more aggressive in terms of chasing statutory debts.
“So we only see insolvency figures going one way. I think it will be a steady rise rather than a fall off a cliff edge.”
A government spokesperson said: “The Business Minister recently wrote to the CEO of Ofgem to raise this issue and ask them to ensure energy suppliers show forbearance to businesses that are struggling to pay energy contracts, and government support does not go to waste.
“We have already provided around £400 billion of direct support to businesses, including business grants, coronavirus loan schemes, the Coronavirus Job Retention Scheme, plus income tax payment deferral.
“This is alongside a new arbitration scheme to help resolve pandemic related rent debt.”
