The number of businesses collapsing in England and Wales has seen a sharp increase, with 2,029 companies going insolvent in October—a 17% rise compared to the same month last year, according to the Insolvency Service. This also marks a 2% increase from September.
Experts warn that insolvencies may become more frequent as businesses struggle with escalating costs, reduced consumer confidence, and ongoing economic uncertainty. Larger firms are also feeling the strain, with a nearly 20% rise in administrations compared to last year.
Simon Edel, a financial restructuring partner at EY-Parthenon, attributes the trend to persistent economic and geopolitical pressures, alongside rising employment costs. He cautioned that the upcoming autumn Budget could further challenge businesses already grappling with financial strain.
Mark Ford, a restructuring expert at S&W, echoed these concerns, predicting a steady stream of insolvencies in the coming months. He pointed to increased employer national insurance contributions, higher minimum wages, and rising business rates as key factors squeezing companies, particularly those hesitant to raise prices for fear of losing customers.
The data also revealed a 14% year-on-year increase in personal insolvencies, with over 10,500 individuals entering insolvency in October. This includes debt relief orders, bankruptcies, and individual voluntary arrangements.
As businesses brace for further economic turbulence, experts emphasize the need for strategic planning to navigate these challenging times and act on unpaid business debts.
