In 2023, there was a notable surge in corporate insolvencies in England and Wales, with 25,158 companies closing their doors, marking a 13.7% increase from 2022 and a substantial rise from pre-pandemic levels in 2019.
Nicky Fisher, president of R3, the UK's insolvency and restructuring trade body said:
"The last year has seen a rising tide of corporate insolvencies. A combination of increased costs, cautious spending, creditor pressure, and the post-pandemic hangover has seen more businesses enter a corporate insolvency process to help address their financial issues than last year."
The surge in creditors' voluntary liquidations (CVLs), compulsory liquidations, and administrations has driven corporate insolvencies to a 30-year high.
Meanwhile, compulsory liquidation numbers are higher than in 2022, but slightly below pre-pandemic levels.
Fisher notes that directors increasingly opt for CVLs due to fatigue, creditor pressure, and challenging trading conditions. The harsh business climate, coupled with a lack of anticipated consumer spending, has led to a rise in administrations, reaching levels not seen in over 60 years.
Personal insolvencies, however, totalled 103,454, reflecting a 12.9% drop from the previous year but remaining higher than pre-pandemic figures.
Although the figures between 2022 and 2023 show a decline, demand for debt advice remains high.
Fisher emphasises that there is often a time lag in reporting financial difficulties, and the true extent of financial hardships faced by households may not be fully captured in current statistics.
Highlighting ongoing financial distress in England and Wales, there are concerns over rising bills, food, and fuel prices. While inflation is decreasing, the high costs of essential commodities could increase personal insolvencies, especially if a cold start to 2024 results in higher energy bills.
Fisher urged individuals and businesses facing financial challenges to seek advice promptly:
"Our message to anyone worried about their finances or the financial health of their business is to seek advice as soon as possible."
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