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The number of registered company insolvencies has soared to 18% in Q1 2023 according to the recent figures released by the government.
However, RSM has predicted that by the end of 2023, the overall insolvency numbers will decrease by around 24% in Q4 2023 from their peak in Q4 2022
The figures show between 1 January and 31 March 2023, there were 5,747 company insolvencies made up of 4,739 creditors’ voluntary liquidations (CVLs), 652 compulsory liquidations, 318 administrations and 38 company voluntary arrangements (CVAs).
The number of company insolvencies in Q1 2023 was already 4% lower than in Q4 2022.
Gareth Harris, partner at RSM UK Restructuring Advisory, said: “Stubbornly high inflation, (particularly in food), the highest interest rates since 2008, significant energy prices year on year and the inability to kick start UK productivity levels are all contributing to the financial challenges and ultimately insolvency levels.
“However, the number of businesses becoming insolvent is expected to fall in Q2 and throughout the rest of 2023. The drop is likely to come mainly from a fall in “shut down” Creditors’ Voluntary Liquidations where the catch-up from the low points of Covid and government support will largely be flushed out.”
He added: “Despite these current high insolvency numbers our experience is that UK businesses are showing robustness and resilience despite the economic challenges and in the best-case scenario we believe the drop in insolvency numbers could be as large as 28% from Q4 2022 to Q4 2023.”
