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Company insolvencies rose 16% in March compared to the previous year as business owners struggled to contend with soaring costs and tougher economic conditions, according to ICAEW insights.
This comes as high borrowing costs and inflation are weighing heavily on businesses, as last month’s figures suggest that there were 2,457 insolvent companies compared with 2,120 in March 2022.
When compared against the March 2021 total of 999, corporate insolvencies rose by 145.9%, which highlighted how government pandemic support measures kept thousands of businesses afloat.
Companies are currently facing the highest borrowing costs since 2008 after the Bank of England raised interest rates to 4.25%, while high inflation also weighs heavily on the economy.
The rise in the latest figures was driven mostly by 2,011 CVLs, which are now 9% higher than in March 2022.
Nick O’Reilly, director of restructuring and recovery at MHA, said: “After recent warnings, UK business administrations have now risen to pre-pandemic levels. As businesses continue to face a perfect storm of high energy bills, increasing interest rates and detrimental inflation, alongside little to no government support, we should expect administrations to continue to rise in the months ahead.
“Given how underwhelming the chancellor’s spring budget was in terms of business support, we have to conclude that high insolvency numbers are acceptable for the government that wants to clear out the zombie companies and allow the fittest to survive.”
There were 288 compulsory liquidations in March 2023, more than twice the number in the same month last year. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus pandemic, partly as a result of an increase in winding-up petitions presented by HMRC. Administrations and CVAs were also higher than the same period last year.
