Record business failures in England and Wales

England and Wales have recorded the second-highest number of company insolvencies since 2009, driven by high interest rates and ongoing inflation pressures from the past two years.

According to government figures, June saw 2,361 company insolvencies, a 17% increase compared to the same month last year, and the highest since May 2023.

The increase in insolvencies is partly due to a rise in the overall number of companies. While the rate of insolvencies is higher than earlier in 2024, it remains lower than the post-2008 financial crisis period.

During the Covid-19 pandemic, insolvency numbers fell sharply thanks to £79 billion ($102 billion) in government-backed loans and a pause on court insolvency cases, which ended in April 2022.

David Hudson, a restructuring partner at FRP Advisory, notes that cost pressures and high interest rates continue to strain businesses.

The Bank of England has maintained a 16-year high interest rate of 5.25% for over a year, and financial markets predict a slow reduction in borrowing costs due to strong underlying inflation pressures.

Sectors such as construction, hospitality, and retail are among the hardest hit. Additionally, stricter approaches to overdue debts by tax authorities, local government, and suppliers, coupled with quarterly rent payments due in June, have contributed to the rise in insolvencies. Despite active debt markets, lenders are increasingly selective about the businesses they support, according to Lindsay Hallam of FTI Consulting.

In contrast, Scotland and Northern Ireland, which have different insolvency laws, reported a 4% annual decrease and a 13% annual increase in insolvencies, respectively, in June.