Company insolvency rates in the United Kingdom have risen by 72% in the past year. it is reported that 20,000 companies have gone out of business according to analysis from audit, tax and advisory firm Mazars.
The figures show that company insolvencies increased over the past year from 11,949 to 20,512
The latest Insolvency Service figures indicated that 1,933 companies entered insolvency with pubs, bars and restaurants in the hospitality sector being the most affected.
Since the pandemic began, the hospitality sector has been hit especially hard. There has been 216 insolvencies of pubs, bars & restaurants in the past month alone. This figure is up 37% from 158 in July of this year.
Over the past 12 months, company insolvencies involving pubs, bars and restaurants have increased 59%, from 1,354 to 2,156. Huge increases in energy bills and supply of foods are forcing many hospitality businesses to consider closure.
Companies and Small Businesses have increasingly struggled to pay their energy bills in 2022. Unlike domestic supplies, commercial supply energy bills are not capped.
Adam Harris, Partner at Mazars said “Many UK businesses were already in a weak position before energy prices surged. The size of energy price rises was always likely to cause some businesses to close but the scale and pace of these insolvencies is especially concerning.”
“Small business owners in particular are struggling under the weight of multiple crises, often without the resources or financial cushion to see them through.”
“The hospitality sector is facing an unusually challenging environment as the cost-of-living crisis hits them from both sides. Just as their energy costs are spiral and their interest costs rise their customers are cutting spending on non-essentials such as eating out.”
“The Government’s upcoming energy package will be key to determining whether many businesses survive. Unless the picture dramatically changes, we are likely to see many more businesses close their doors in the months to come.”
