Insolvencies surge in England and Wales as pressure mounts on businesses

Quick read

The insolvency statistics released for March 2023 demonstrate the impact of turbulent trading climates on UK businesses, in particular soaring costs and decreased consumer spending.

The March 2023 insolvency statistics show that UK corporate insolvencies have risen 16% year-on-year and 38% since February 2023.

The rise in insolvencies applies across all corporate insolvency processes including company voluntary arrangements and administrations suggesting that increasing numbers of larger corporates are facing distress.

What is causing a rise in insolvent businesses?

Key factors exacerbating financial distress include:

High energy prices and the end of the Government's Energy Bill Relief Scheme. FRP Advisory's recent poll of retailers showed that nearly a fifth of retailers were not confident in trading through the next year in light of reduced support.
Decreased consumer spending. Personal insolvencies in March 2023 increased by 39% compared to February 2023.
Increased borrowing costs and difficulties in securing financing.
The end of Covid-19 support measures and repayments on support debt now falling due.

Next steps for businesses facing financial distress

Directors should be alert to signs of financial distress and seek advice early if their business may be at risk of insolvency.
Clear signs of insolvency risk include struggling to offload stock, insufficient cashflow and difficulty paying rent, staff or suppliers.