Covid-19 sends 1,200 firms a day to the wall

OVER 214,000 companies ceased trading over the six months to the end of March, around 1,200 per day, according to an analysis of official data by IT group DSA Connect.

It said that companies in the professional, scientific and technical sectors were the most likely to go out of business, with 38,530 shutting – 18 per cent of the total.

The next worst hit sector was business administration and support services, where the 27,420 companies that shut down made up 13 per cent of the total.

The economic strain caused by the Covid-19 pandemic is believed to be responsible for most for the business closures.

DSA, which specialises in the safe disposal of IT systems, said nearly a quarter of businesses shutting down were based in London, where 50,510 closed. The South-east was next with 30,575 closures, while in third place, the North-west saw 20,995 companies shut down.

DSA Connect chairman Harry Benham said: “Business owners have had a tough time during the Covid-19 pandemic and it is understandable that so many have ceased trading.”

According to data from the Insolvency Service, 43,442 individuals and businesses have gone bust since the pandemic started in mid-march 2020 until the end of April. That compares to the 75,513 people and companies that became insolvent during the preceding 13-plus months.

Over 12,000 companies have become insolvent since Covid hit Britain, a fall of 37 per cent on pre-pandemic levels. The number of individuals going through bankruptcy proceedings is down 43 per cent to 31,346.

Nicky Fisher, deputy vicepresident at insolvency and restructuring trade body R3, said: “Government support measures have prevented the economic damage of the pandemic from translating into increased corporate insolvencies. In fact, they have reduced the number of company insolvencies by more than 30 per cent since it began.

“However this has also left the Government facing the challenge of how to wind down the support measures in a way that doesn’t open the floodgates. We urge any director worried about finances to seek advice now so they have as many options open as possible for turning around their situation and business.”

On Friday the Office for National Statistics is tipped to say Britain’s economy grew 2.4 per cent in April, an increase of 27.9 per cent on the same month last year. In March, the economy grew 2.1 per cent.