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Peak of England and Wales companies going bust highest since the 2009 financial crisis

Wednesday, November 1st 2023 - 21:09 UTC
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Firms in “critical financial distress” jumped 25% in the last three months, insolvency expert Begbies Traynor said. Firms in “critical financial distress” jumped 25% in the last three months, insolvency expert Begbies Traynor said.

Official figures from England and Wales show that the number of companies going bust this year is on track to be the highest since the financial crisis in 2009. Insolvencies rose 10% from a year ago in the three months to the end of September, and there has also been a sharp rise in the number of firms at risk of going bust.

Firms in “critical financial distress” jumped 25% in the last three months, insolvency expert Begbies Traynor said.

They are defined as having county court judgments exceeding £5,000 against them - often a precursor to going under.

There are nearly 38,000 companies in critical financial distress, according to data prepared by analysts Red Flag for Begbies Traynor.

Julie Palmer, from Begbies Traynor, said this was down to a combination of higher inflation and borrowing costs twinned with weaker consumer confidence and demand.

“Tens of thousands of British companies are in financial dire straits now that the era of cheap money is firmly behind us,” she said.

“Businesses that had loaded up on debt at rock-bottom rates, and were only able to cling on during the pandemic thanks to government support, must now deal with a financial reality check as higher interest rates hit working capital for the foreseeable future.

”Taken together with stubbornly high inflation and weak consumer confidence, many of these businesses will inevitably head towards failure.”

The construction sector saw the sharpest increase in companies facing critical distress with an increase of 46% compared to just three months ago.

Categories: Economy, International.
Tags: England, Wales.

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