England, Wales on track for most company insolvencies since 1993

By David Milliken

LONDON (Reuters) – Company insolvencies in England and Wales look on track to hit a 30-year-high in the final three months of 2023 despite a sharp drop in December, official figures suggested on Tuesday.

The government’s Insolvency Service said 2,002 companies were declared insolvent last month, 2% more than a year earlier and the smallest monthly increase since July.

The figure – which is not seasonally adjusted – was down sharply from November’s reading of 2,470, which was the second-highest since monthly records began in January 2019.

Seasonally adjusted quarterly data will be published on Jan. 30. But on a non-seasonally adjusted basis, nearly 6,800 companies were declared insolvent in the three months to the end of December, the highest since the first quarter of 1993.

British businesses were under pressure through most of 2023 from a big increase in energy costs, fast-rising wages and an increase in Bank of England interest rates to their highest in more than 15 years.

“Over the past 18 months, with a combination of higher inflation, higher energy bills and higher interest rates, we’ve unfortunately seen many companies fail,” said Sarah Rayment, co-head of restructuring at risk advisory company Kroll.

Company insolvencies fell sharply during the COVID-19 pandemic – reflecting temporary government aid to businesses and legal barriers to forced liquidations – but are now running at a monthly level around 50% higher than before the pandemic.

Part of the increase in insolvencies reflects the higher number of registered companies compared with previous decades.

Previous third-quarter data showed that the rate at which companies were being liquidated was the highest since 2014, but much lower than in the years before that.

The Insolvency Service also released data on individual insolvencies in England and Wales, which fell 20% in the year to December to their lowest since August 2020.

(Reporting by David Milliken; Editing by Sachin Ravikumar and Kim Coghill)