Insolvencies return to pre-covid levels as pressure builds on firms

BUSINESS insolvencies bounced back to pre-pandemic levels in August as companies buckle under supply chain disruptions and staffing shortages.

There were 1,348 registered company insolvencies over the month, up from 1,097 in July and 71pc higher than the same period a year ago, according to statistics from the Insolvency Service.

Insolvencies have been artificially suppressed during the pandemic because of a flood of government support measures to help businesses survive the pandemic.

August’s rise was driven by company voluntary liquidations, the most common type of insolvency, in which directors elect to wind up a business – typically because it is in sustained financial distress.

“While CVL numbers have now returned to pre-pandemic levels, numbers for other insolvency procedures, such as compulsory liquidations for companies and bankruptcies for individuals, remain lower,” the Insolvency Service said.

Colin Haig, president of insolvency and restructuring at trade body R3, said the figures “highlight how much tougher the climate is for businesses and individuals than this time last year, and the toll the pandemic has taken on business and personal finances over the last 12 months”.

Retail sales fell unexpectedly in August, marking a fourth consecutive month of decline. That is the longest run of successive drops since records began 25 years ago, according to the Office for National Statistics.

The fall was also likely to be linked to fears over the delta variant, which was in high circulation throughout the month, poor weather, shortages and a transfer of spending from goods to services.