The economic effects of the pandemic continue to impact heavily on local businesses as latest Government insolvency statistics highlight an increase in corporate insolvencies to their highest level since January 2020.
Monthly research by the Insolvency Service shows that the number of insolvent businesses in England and Wales increased by 7.2% in September to a total of 1,446, which is 55.8% higher than September 2020’s figure of 928 and approaching the pre-pandemic statistic of 1,515 for January of last year.
According to the Midlands branch of insolvency and restructuring body R3, the dramatic increase in corporate insolvencies compared to this time last year illustrates just how crucial the Government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for many now it has ended.
R3 Midlands Chair Eddie Williams, a partner at PwC in the East Midlands, said: “The monthly rise in corporate insolvencies was driven by Creditors’ Voluntary Liquidations, which have increased for the third consecutive month. Directors may be closing their businesses after deeming financial survival unlikely after 18 months of struggling through a pandemic.
“Despite the fact that businesses have benefitted from two months of restriction-free trading and the economic boost over the summer, conditions are still not back to where they were before Covid-19.
“Consumers are now more cautious about the state of the economy and the growing cost of living and are more wary about spending their money. With widespread supply chain disruption and significant wholesale energy price increases building up between September and October, there is likely to be little slack for vulnerable businesses.
“For those companies continuing to struggle, the sooner advice is sought from a qualified and reputable source, the more potential there is for a solution.”
