February’s Insolvency Statistics – Closures Still Rising

There’s a familiar look to February 2024’s insolvency statistics. Not only has the number of insolvencies increased from the same period last year again, but it’s also risen from January’s figures too.

February saw 2,102 company insolvencies recorded. This is a 17% increase from the 1,801 seen in February 12 months prior. Being a leap year, this February’s extra day puts it at somewhat of a disadvantage, but still doesn’t warrant an increase of 301.

While you’d perhaps expect the immediate month after Christmas to see a spike in company insolvencies, January actually gave us fewer than February. 1,769 were recorded in January, giving us a month-to-month increase of almost 19%.

New hurdles

It’s been an unfortunate trend for some time now to see an increase from the previous year. The economic headwinds that UK businesses have had to face recently have been well-documented, but have recently been added to.

Troubles in the Red Sea have seen the need to divert shipping vessels along much further routes, costing far more in fuel, and increasing shipping times significantly. These increases are beginning to be passed on to the companies buying from such suppliers and could perhaps be a factor in February’s insolvency numbers. These changes are said to have affected almost half of all retailers and import/export firms in the UK, so could well make an impression on future months’ numbers too.

Ben Westoby, Senior Client Manager at Forbes Burton, suggests that we’re unlikely to see any big changes soon. Commenting on February’s statistics, he said that “as none of the external challenges facing UK companies such as the Cost-of-Living Crisis and the Russian invasion of Russia, have been resolved as yet, there’s little sense in expecting anything different in UK insolvency statistics.

Houthi attacks in the Red Sea could well be the straw that breaks the camel’s back for many companies, and makes future rises more likely than a drop in the short term.”

Expect the unexpected

Indeed, the recent issues with shipping vessels in the Red Sea should serve as a reminder to UK businesses that we should expect the unexpected. Those blindsided by complications caused by the pandemic would have been forgiven for thinking that things couldn’t have got much worse afterwards, but the fuel price rise owing to the conflict between Russia and Ukraine soon put paid to that.

Any businesses doing well right now would do well to keep an eye on current affairs and perhaps be slightly more cautious with any growth plans. Any more global problems would certainly serve as the final nail for those that are just about surviving at the moment.

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