October Shows Monthly Insolvencies Still Higher than Last Year

It’s a familiar tale being told by today’s insolvency report for October. The monthly statistics, published by the Insolvency Service, show that businesses are still closing at a higher rate than 2022 and other recent years. Every month of 2023 has so far trumped 2022’s numbers for the same month, and that trend looks like it may well carry on up to the end of the year.

Unfortunately, the cost-of-living crisis shows no signs of letting up, meaning that potential customers are still keeping their purse strings tightened. At the same time, sanctions on Russia mean that utility bills remain high for customers and business owners alike. Like the cost-of-living crisis, there’s no obvious endpoint on the horizon for Russia’s invasion of Ukraine, so both of these particular headwinds are likely to continue to affect businesses for the foreseeable future.

October saw 2,315 registered companies become insolvent across England and Wales, an 18% increase from October 2022. Most methods of tackling insolvency have risen from last year, with 1,889 creditors’ voluntary liquidations making up the majority of the number at 19% higher than last year. Meanwhile, the 256 compulsory liquidations mark a rise of 2%, 146 administrations a rise of 36%, and 23 company voluntary arrangements a 360% increase from the same month last year.

This bad news continues across the rest of the UK too. Although the overall number of company insolvencies in Scotland and Northern Ireland are markedly fewer than those seen in England and Wales, they still show an increase from 12 months prior.

There was a 21% increase in company insolvencies in Scotland, with 99 businesses running into trouble. While not an insignificant percentage, it pales in comparison to Northern Ireland’s 80% rise from October 2022. 27 company insolvencies were recorded in NI, split fairly evenly between 12 CVLs and 14 compulsory liquidations, as well as one administration.

Rick Smith, managing director of Forbes Burton suggested that “the trend emerging throughout 2023 so far is one of significant distress among UK businesses. We’re unlikely to see things get much better for struggling companies in the short term, and the Christmas period can hinder just as many businesses as it props up. B2B businesses in particular, often have to account for a December slump when a lot of their potential clients are out of the office”.

It remains to be seen if these percentage increases from the same period last year continue toward the end of Q4, but there’s little to suggest that they‘ll slow down. General socio-economic and geo-political conditions don’t seem to be improving any time soon, so retailers will be looking to the so-called ‘golden quarter’ to lift their fortunes on the run up to Christmas.

Those banking on a dramatic uplift in festive sales however, may be disappointed. Higher mortgages, rents, utility bills, and petrol prices have put a squeeze on the publics wallets, and could see less spent over November and December than in previous years. Indeed, KPMG’s Consumer Pulse report for last month showed that 56% of UK consumers have already reduced any non-essential spending.

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