Peninsula surveyed 577 businesses to find out how they are preparing for the implementation of the Employment Rights Bill and their concerns around the risks posed by the different changes.
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December saw yet another increase in company insolvencies driven by collapses across construction companies and the end of cheap borrowing
The latest figures showed 2,002 companies went into insolvency, up 2% from last year’s 1,965 failures. This was markedly improved on November when the figure went up by 18%. Historically December is a slow month for corporate failures but this did not mask concerns about the risks of higher rates of insolvency in 2024.
For the quarter insolvencies were up 9% from Q3 2023 and 14% higher than the same quarter of 2022 with the most insolvencies since Q4 of 2008. Additionally, it was the highest number of CVLs in a quarter since 1960.
The December figures showed that company insolvencies were made up of 153 compulsory liquidations, 1,731 creditors’ voluntary liquidations (CVLs), 103 administrations and 15 company voluntary arrangements (CVAs).
The construction industry remained the worst affected sector with 416 insolvencies in total, up from 377 the previous month.
The motor vehicle trade recorded the second highest number of insolvencies at 379, followed by the accommodation sector with 374. Both were up a significant amount from the same month last year.
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Oliver Collinge, director at PKF GM said: ‘Predictions of a tsunami of insolvencies are quickly becoming a reality among smaller businesses where CVLs are more typically used.
‘There is no doubt that higher interest rates and continuing cost pressures have seriously impacted many UK businesses, with one in 186 active companies entering insolvent liquidation in 2023 - the highest rate seen since Q3 2014.’
High borrowing rates and continuing inflation pressures have exacerbated a difficult business landscape.
Mark Ford, partner in restructuring services at Evelyn Partners said: ‘The trading environment for businesses in the UK remains pretty onerous.
‘It’s worth pointing out that this record is in absolute terms: as a proportion of registered companies, the 2023 insolvency rate of 53.7 per 10,000 active companies was much lower than the peak of 94.8 during the 2008/09 recession.’
Andy Davis, strategic director at Azets said there were no signs of improvement in 2024.
‘Even before the pandemic, in the decade following the financial crash, 300-year low interest rates created thousands of ‘zombie’ businesses that were able to live off cheap borrowing without any significant growth.
‘The high level of insolvencies throughout 2023 is driven by a vast number of businesses unable to service a more meaningful interest bill.
‘Unfortunately, the outlook for 2024 is not much better and we can expect business failures to rise at much the same rate.’
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Peter DoneGroup Managing Director and Founder
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Peninsula Team