Business insolvencies soar by 60% in June
July 18, 2023
The corporate insolvency statistics for June 2023 published today show an ongoing and worrying trend for UK businesses. A perfect storm of interest rate rises, savage input costs and labour force pressures, coming so soon after the pandemic, have led to business insolvencies soaring to 60% in June. Here is the breakdown of the last six months.
June 2023
2,290 companies across the UK filed for one or other of the formal insolvency procedures. This is 27% higher than June 2022 and 47% more than in June 2019 pre-pandemic.
The market is dominated still by Creditor Voluntary Liquidations (CVLs), which represented 80% of all insolvencies, although the rate of Compulsory Winding Ups (CWUs) via the court is rising. This June, CWUs were 13% of insolvencies, compared to only 9% in 2022, but still below the figure of 22% pre-pandemic.
For more information on the CVL trend, read our recent article, here.
Six months to June 2023
13,056 companies went into insolvency in the first six months of this year. This compares to 11,300 (up 16%) in June 2022 and 8,136 (up 60%) pre-pandemic in 2019. If this rate continues as all commentators expect, there will be over 26,000 failures this year, just short of the highest year on record in 2009 when there were 26,556 insolvencies in the wake of the global financial crisis. The trade insurer, Allianz has predicted that there will be 28,000 corporate insolvencies in 2023.
Scotland
After a slower rate of insolvencies compared to England and Wales in 2023, company failures in Scotland surged in June, reaching 113. This compares to 75 (up 51%) in June 2022 and 67 (up 69%) pre-pandemic in June 2019. Cumulatively, Scottish failures were 623 in the first half, up 33% on 2022 and 19% on June 2019.
What next for struggling businesses?
Although the UK has somehow avoided a recession so far, the economy is wallowing with virtually zero growth. Some inflationary pressures are showing signs of easing, but the labour market remains a major issue and interest rates are set to go still higher for those businesses on variable rates or with a fix ending soon.
It seems inevitable that insolvency statistics will rise further, making the need to stay on top of both customer and supply chain risks and to control cash flow never more important than in the months ahead.
Getting help
Few management teams have the bandwidth or range of experience to deal with the many challenges they face at the present time. There are still opportunities to grow, either organically or by acquiring complementary businesses, but the main focus for many entrepreneurs will be holding the line and for some, managing down the size of the business. Difficult and painful decisions will need to be taken.
In these circumstances, there is no shame in reaching out to independent professionals to ask for a helping hand. The earlier action is taken, the more options will be available and the better the outcome is likely to be.
Get in touch
If you are seeking professional advice for your business, Opus is here to help. You can speak to one of our Partners who can discuss options with you. We have offices nationwide and by contacting us on 020 3326 6454, you will be able to get immediate assistance from our Partner-led team.