Interest rates and costs push insolvencies to 30-year high
THE number of businesses going bust hit a 30-year high last year amid a jump in costs and interest rates.
Data out yesterday revealed there were 25,158 company insolvencies across England and Wales in 2023.
The figure was up 14% on 2022 and the highest annual tally since 1993.
Julie Palmer, a partner at insolvency specialist Begbies Traynor, said: “Thousands of businesses have been pushed into insolvency due to a combination of interest rates at levels we haven’t seen in over a decade, pushing the cost of borrowing up, alongside inflation, weak consumer confi- dence and rising input costs.”
Yesterday’s figures from the Insolvency Service revealed creditors’ voluntary liquidations rose 9% to 20,577, the highest since records began in 1960.
CVLs are used when directors of a company with debts it cannot pay opt to throw in the towel.
The number of firms that went to the wall in the final three months of 2023 reached the highest figure since the financial crisis.
Discount chain Wilko was one of last year’s most high-profile casualties, leading to the loss of more than 12,000 jobs.
Experts predict 2024 is set to be another difficult year for businesses. Despite expectations that interest rates will start to fall, and with wholesale energy costs easing, some firms have warned of a hit from a big increase in the national living wage and business rates.
Trade body UK-Hospitality highlighted both as it appealed to Chancellor Jeremy Hunt for help in the spring Budget.
It came as research showed nearly 23,000 pubs, restaurants and the like have closed since the pandemic. More than 6,000 licensed hospitality venues – which also include nightclubs and bars – have shut in the past year alone.
Kate Nicholls, chief executive of UK-Hospitality, said: “These stark closure figures underline the seismic challenges facing hospitality businesses.
“It is now a case of supporting the sector or losing many businesses for good.
“Endless price rises and an ever-growing tax burden has left businesses on the cliff-edge and has deterred investment.”