UK company insolvencies jumped 39% throughout March with 2,114 businesses entering insolvency in March 2022, up from 1,517 in February, according to Mazars.
It revealed that the figures show that the first quarter of this year has seen the highest number of company insolvencies – 5,197 – in any quarter since Q3 2017.
Mazars said rises in interest rates have made businesses’ debts more expensive to service and is likely to have “pushed some heavily indebted businesses into the red”.
It added that businesses have also had to deal with “spiralling inflation”, with energy costs rising by an average of 250% in the first quarter of this year compared to the same quarter in 2021. These costs, combined with HMRC’s move to recover outstanding arrears from companies that failed to agree a Time to Pay arrangement (TTP), mean that companies are being left with few options.
Rebecca Dacre, partner at Mazars said: “Businesses that were just hanging on before the recent interest rate rises have seen the rise in borrowing costs push them over the edge. Between interest rates and inflation, this is the most difficult period for businesses since the height of the pandemic.
“This time they are having to manage without Government support. UK businesses will be hit by the ‘cost of living crisis’, just as consumers will be.”
She added: “With no more Government protection from their creditors, even more businesses can be expected to fail.
“Insolvency practitioners are now busier than they have been in a very long time. There has long been talk of a ‘wave of insolvencies’ that would happen once the insolvency moratorium was lifted. We’re now starting to see it.”