The Insolvency Service figures for Q2 (April to July 2023) show that the number of company insolvencies were the highest since Q2 2009, a 9% increase on Q1 2023.
Creditorsā Voluntary Liquidations (CVLs) accounted for the largest proportion of the rise, with the highest quarterly total recorded since 1960, they were also the most popular insolvency procedure accounting for 83% of cases. Compulsory liquidations accounted for 10% of all cases, Administrations sat at 6% and the final 1% were Company Voluntary Arrangements (CVAs).
Inflation, falling business confidence, high-interest rates and a challenging credit environment have all put pressure on businesses in the last quarter. These figures demonstrate the extent to which businesses are currently struggling.
Meanwhile, in the personal arena, the number of personal insolvencies was down on the previous quarter by 8%. The detail shows that the number of people choosing to enter an Individual Voluntary Arrangement (IVA) was down, although bankruptcies saw an increase of 11% compared to Q2 2022. Notably there was an increase of 22% in the proportion of self-employed people declaring bankruptcy compared to the same period as 2022. There is significant pressure on individual finances at the moment, with food price inflation at a generational high point, mortgage costs continuing to rise, energy prices unstable, and many incomes not rising in line with the cost of living.
Charles Brook, Xeinadin Corporate Recovery Director said āIn light of the anecdotal evidence of additional cost pressures on businesses we are not surprised by these figures. The economy as a whole is facing its toughest challenge for decades trying to recover in the wake of shocks delivered by Covid and Brexit. Supply chain issues, high inflation and now an increase in interest rates have all taken their toll. We are hoping that some positive indicators, including the slight inflationary dip from 8.7% in May 2023 to 7.9% in June, will deliver a reduction in the cost of borrowing for hard-pressed businesses, and provide a little relief and support towards recovery.ā