Last year saw a 30-year high in the number of companies going bust in England and Wales, with over 25,000 company insolvencies registered in 2023.
This marks the highest figure since 1993, attributed to the challenges posed by rising costs and interest rates for businesses. Factors such as increased energy bills and the cost of living crisis impacting consumer spending contributed to financial distress for many firms. The figures reveal that one in 186 active companies faced insolvency in 2023.
Scotland and Northern Ireland also recorded their highest numbers of company insolvencies since 2012 and 2019, respectively, although different bankruptcy laws apply to these nations compared to England and Wales. Julie Palmer, a partner at insolvency specialist Begbies Traynor, described the situation as a "perfect storm for financial distress," citing elevated interest rates, inflation, weak consumer confidence, and rising input costs.
The Insolvency Service's data indicates a 9% increase in the number of companies voluntarily closing (creditors' voluntary liquidations or CVLs) to 20,577, the highest since records began in 1960. Companies forced to close, known as compulsory liquidations, surged by 44% to 2,827.
Despite the record number of insolvencies, the rate of insolvencies relative to the total number of registered companies in the UK was still lower than the peak rate during the 2008-09 recession. The challenging business environment in 2023 led to high-profile collapses, such as retailer Wilko, resulting in the loss of over 12,000 jobs.
Experts suggest that this year could also pose challenges for UK businesses, indicating a potential continuation of economic uncertainties and financial pressures.
