Insolvencies on the Rise According to Latest Government Statistics
UK businesses have had an extraordinarily tough two years, but they’ve been assisted through the worst of the pandemic with the help of government-backed loans and support schemes.
But now that the worst of the pandemic seems to be behind us, so too has the government cut back its financial support, and already UK businesses are starting to feel the squeeze.
In this article, we explain why government statistics demonstrate that there is a rise in insolvencies, before exploring the insolvency options available to struggling businesses.
What Are the Latest Government Insolvency Statistics?
The latest government insolvency data for 2022 demonstrates that there is a clear rise in insolvencies since the year began. The latest figures released state that in January 2022, 1560 company insolvencies were registered in England and Wales.
The figures represent businesses that have liquidated due to their insolvent position, and the latest government insolvency data for 2022 shows that there were a total of 1358 companies entering into a creditors’ voluntary liquidation (or CVL) process. The remainder of the total figure amounting to 1560 insolvencies is composed of companies being forced into compulsory liquidation.
The figures are significant, because they demonstrate a clear rise in insolvencies compared to January 2021, a year prior. The figures for January 2021, in the middle of the ongoing pandemic, were almost half this, totalling 758 company insolvencies. Two years prior, in January 2020, company insolvencies totalled 1508.
This means that the total number of company insolvencies occurring in January 2022 has now exceeded pre-pandemic levels. This is a trend that we have seen increasing month on month since October 2021, and it’s a trend that’s likely to continue into the near future.
Why Is There a Rise In Insolvencies in the United Kingdom?
The government insolvency data for 2022 shows that company insolvencies are clearly on the rise, and this is down to one clear factor.
Throughout the pandemic, the government introduced a number of effective measures that helped to protect businesses, and that led to a decline in the number of insolvencies compared to pre-pandemic years.
These measures included a number of government-backed loans that offered low-interest rates to struggling businesses. Companies could take advantage of the furlough scheme during the lockdown, while there was a complete moratorium on compulsory liquidations for a number of months.
Now the pandemic is easing, we’ve seen the government stop much of its support and wind down initiatives like the furlough scheme, as it aims to get the country back to some semblance of normality.
However, now that these measures have been removed, we are seeing a rise in insolvencies. Some companies were being propped up by government support and with that now gone, they have discovered their business may no longer be viable.
Some companies will have been protected by the moratorium on insolvencies, and when this ended, creditors will have begun chasing their unpaid debts again. Other companies are simply struggling to stay competitive in the post-pandemic United Kingdom, particularly given the political unrest we’ve seen in other parts of the world, and other factors such as Brexit.
Will the Rise in Insolvencies Affect My Business?
The rise in insolvencies points to a trend that will likely continue, particularly as the United Kingdom struggles economically in the wake of recent world events and political decisions. If your company has been reliant on government support throughout the pandemic, it’s likely you may find it difficult to stay solvent in the future.
If this is the case, it’s important to remember that despite government support being curtailed, there are still many insolvency options available.
Companies need to quickly reassess their post-pandemic financial situation, make cuts where necessary and plan to stay competitive in fast-evolving marketplaces. The key parameter to survival is planning ahead, and this may require the expert skills of an insolvency practitioner who can provide impartial financial advice for your company.
Contact Irwin Insolvency Today for Expert Insolvency Advice
Is your company struggling to pay its bills now that the UK government has withdrawn coronavirus support measures? Then act fast and contact Irwin Insolvency for expert insolvency advice before it’s too late to turn things around.
Our experienced insolvency practitioners can assist with solvency planning, corporate restructuring and business turnaround to help get your company back on the right financial track. Contact our team today to find out how we can help you.