High Levels of Company Insolvency Persist

The number of company insolvencies in England and Wales surged by 16% year-on-year in July, with 2,191 firms declaring bankruptcy, according to official statistics. This increase highlights the ongoing struggles businesses face as they attempt to recover from the dual pressures of high inflation and elevated borrowing costs. Although the figure represents a 7% decrease from June, it remains significantly higher than insolvency levels recorded during the COVID-19 pandemic and the aftermath of the 2008/09 financial crisis. Experts, including Rebecca Dacre from advisory firm Forvis Mazars, emphasize that these figures serve as a stark reminder of the challenges many businesses continue to encounter. Dacre pointed out that falling consumer spending, exacerbated by the cost of living crisis, has severely impacted the survival of numerous companies, particularly in the retail and hospitality sectors. She warned that without a robust economic recovery, the trend of rising insolvencies is likely to persist. In addition to corporate insolvencies, individual insolvencies also saw a notable increase, rising by 24% year-on-year in July. This trend further underscores the financial strain affecting both businesses and individuals in the current economic climate. As companies grapple with high borrowing costs and seek refinancing options, experts predict an uptick in restructuring activities. The situation remains precarious, with many firms still far from achieving stability and growth in the face of ongoing economic uncertainties.