According to the latest figures from the Insolvency Service, business insolvency numbers in England and Wales in January were the highest seen for that month since 2019.
The latest insolvency statistics present a bleak picture of the business environment in England and Wales, as an increasing number of businesses succumb to the ongoing challenges created by difficult economic conditions.
Although January’s insolvencies were 11.8% lower than those in December, they were 5% higher than January 2023 and the highest corporate insolvency figures seen in January for four years.
Key insolvency statistics
- 1,769 companies became insolvent in January 2024, a 5% increase from January 2023.
- Compulsory liquidations (the most severe form of insolvency) surged by 66% year-on-year, rising to 339, the second-highest number in four years.
- Creditors’ voluntary liquidations (CVLs) decreased by 6% to 1,294, while administrations and company voluntary arrangements (CVAs) rose by 40% and 14% respectively.
- There were no receivership appointments.
Why are business insolvencies increasing in England and Wales?
The increase in insolvency numbers can be attributed to several factors:
- Post-pandemic challenges: Ongoing economic pressures, low consumer confidence and a flat housing market continue to impact businesses.
- High interest rates: An increase in large-scale administrations has been predicted as a result of the rising rates.
- High inflation: Increases in inflation have led to higher costs for businesses, which result in lower project margins if they are unable to pass the cost onto their customers.
- High energy costs: Soaring energy prices are adding to the mounting costs businesses currently face.
- Lack of financial support from the government: The end of pandemic support measures has left businesses struggling with high costs and thin margins exposed.
- Disappointing holiday season: Struggling businesses in seasonal industries, such as retail, may have been relying on a boom in business over the Christmas period that unfortunately never materialised.
If you are a business owner currently experiencing financial difficulties, do not suffer in silence. Confidential advice and support from our specialist business recovery team can help you explore options for the future to find the best next step for you and your company. Contact us today for an initial discussion.
