By David Milliken
LONDON (Reuters) – England and Wales recorded the second-highest number of company insolvencies since 2009 last month, government figures showed, reflecting high interest rates and increased costs caused by rapid inflation in 2022 and 2023.
June saw 2,361 company insolvencies on a seasonally adjusted basis, Britain’s Insolvency Service agency said, 17% more than a year earlier and the most since May 2023.
The high total partly reflects an increase in the overall number of companies. The percentage of companies declaring insolvency was slightly higher earlier in 2024 and is well below rates in the years after the 2008-09 global financial crisis.
Insolvencies fell sharply during the COVID-19 pandemic itself, due to 79 billion pounds ($102 billion) of government-backed loans to businesses and a halt to court insolvency cases which ended in April 2022.
“Insolvency levels are climbing again as historic cost pressures continue to feed through and businesses contend with what are still challenging conditions, marked by persistently high interest rates,” said David Hudson, a restructuring partner at FRP Advisory.
The Bank of England has kept interest rates at a 16-year high of 5.25% for more than a year and financial markets see only a slow reduction in borrowing costs over the coming year as underlying inflation pressures remain strong.
Construction, hospitality and retail were among the hardest-hit sectors, accountants said.
Higher insolvencies also appeared linked to a tougher stance towards businesses’ overdue debts from tax authorities, local government and suppliers. June is also a month when quarterly rent payments are commonly due.
“Although debt markets remain active, lenders are increasingly selective about which businesses they support,” said Lindsay Hallam, senior managing director for corporate finance and restructuring at FTI Consulting.
Scotland and Northern Ireland – which have different insolvency laws to England and Wales – reported a 4% annual fall and a 13% annual rise in insolvencies respectively in June.
($1 = 0.7750 pounds)
(Reporting by David Milliken, editing by Andy Bruce)
