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This month’s insolvency statistics

15th December 2023

Commenting on today’s UK company insolvency statistics, Nick Agius, Director at Cardano Advisory, said:

“Today’s insolvency statistics, which show a 20% increase in insolvencies over the last 12 months, are just another reminder of the continued struggles UK corporates are facing when it comes to manage rising costs. If you go back further to the pre-covid economic environment of Nov 2019, there has been a 60% increase in the number of insolvencies. We are clearly still seeing the delayed aftereffects of the economic impact that the pandemic caused, with the struggles faced by businesses compounded by inflation and interest rates.

“UK businesses are trying to juggle cash flow and debt obligations. Construction, retail, food and beverage services seem to be particularly impacted. This heightened uncertainty raises concerns about these companies’ capacity to sustain DB pension liabilities reflected on their balance sheets. Despite this, what remains essential is for companies experiencing strain to maintain open and transparent communication with trustees. Trustees also need to make sure they are well-informed of any pressures on their sponsor so that they can plan and act accordingly in the best interests of the members.

“It is clear that pressure on cash flows persists and wider economic performance is under strain as we saw earlier this week with the UK economy shrinking by 0.3% in October. Alongside the high interest rate environment we are in, these pressures are continuing to bite on businesses. Many businesses will be hoping for economic stabilisation as they head into 2024, particularly given the Bank of England’s decision yesterday to hold interest rates. While the high rates appear to be squeezing down inflation, we believe businesses will still have to contend with the current interest rate environment for much of next year.