UK insolvencies continue rising with thousands at risk of going bust
The number of companies going bust was at its highest in the last two quarters since the second quarter of 2009, according to official figures released today.
Between 1 July and 30 September, there were 6,208 company insolvencies in England and Wales, up 10 per cent year-on-year. This included 4,965 creditors’ voluntary liquidations, the highest it has been since the start of the series in 1960.
Over the last 12 months, one in 191 active companies entered insolvent liquidation, the Insolvency Services reported.
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Meanwhile, according to the latest Red Flag Alert report published by insolvency specialists Begbies Traynor found a 25 per cent increase in the number of business in critical financial distress in the last three months.
Nearly 40,000 companies in the UK are moving towards insolvency, according to the data, with almost 480,000 businesses seen to be in significant financial distress, up 8.7 per cent quarter-on-quarter.
In particular, the group said there are serious concerns regarding the outlook for the construction and real estate and property services sectors.
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Julie Palmer, partner at Begbies Traynor, said: “Tens of thousands of British companies are now in financial dire straits now that the era of cheap money is firmly behind us. Businesses that had loaded up on debt at rock-bottom rates, and were only able to cling on during the pandemic thanks to Government support, must now deal with a financial reality check as higher interest rates hit working capital for the foreseeable future.”
She added: “Taken together with stubbornly high inflation and weak consumer confidence, many of these businesses will inevitably head towards failure.”
Ric Traynor, executive chairman at Begbies Traynor, added that the ongoing geopolitical uncertainty, higher prices and interest rates, combined with lower consumer demand and an anticipated recession, may be too much for many distressed businesses.
He said he expects many more “zombie” companies to continue to fail.
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