An unexpected year-on-year dip in the number of corporate insolvencies in England and Wales does not reflect current tough trading conditions, with figures still soaring above pre-pandemic levels.
This is according to the Midlands branch of the UK’s insolvency and restructuring trade body R3 and comes on the back of figures published this week by the Insolvency Service which show that seasonally adjusted corporate insolvencies decreased by 5.1% against 2023’s annual figures, falling to 23,872 from 25,163, but increased by 7.9% on 2022’s figure of 22,129.
Corporate insolvencies numbered 1,838 in December, which is 6% lower than the 1,962 in November and 14% lower than the 2,139 in December 2023. These figures, however, remain significantly higher than those seen both during the COVID-19 pandemic and between 2014 and 2019.
R3 Midlands Chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “Despite a year-on-year decline in corporate insolvency numbers, the figures for this year are still higher than in 2022 and well above pre-pandemic levels.
“They have been driven by another year of high costs and a series of political, economic and geopolitical events which have taken a toll on businesses here in the Midlands and nationally. R3 members have told us that the Election, the Budget and the conflict in the Middle East have all led to increases in enquiries and requests for advice and support.
“From a sectoral perspective, retail, hospitality and construction have all suffered this past year. All three of these industries have been hit hard by continued rises in expenses, while retail and hospitality have been affected by cautious consumer spending, and construction by bad weather and the delay to project starts and commissions caused by the General Election.
“Going forward, these are the sectors likely to be most affected by the Chancellor’s planned increases in Minimum Wage, Living Wage and Employers’ National Insurance Contributions. Although it’s likely we won’t see the impact of these on corporate insolvency figures until the end of the first, or possibly the middle of the second, quarter of this year, the prospect of their introduction is already causing concern for businesses right across the economy.
“R3’s message to anyone who is worried about finances is to seek advice as soon as possible. We’ve seen countless examples of businesses reaching out too late and which could have achieved a more positive outcome if they had acted sooner.
“Most R3 members will give prospective clients a free initial consultation to learn more about their situation and outline the potential options open to them to improve it.”
