Company insolvencies dip in August but figures still reflect 'challenging' times

There were 1,953 business insolvencies in England and Wales in August, according to the Insolvency Service, compared with 2,286 in August 2023

Official data reveals that the number of companies becoming insolvent in August was 15% lower than during the same period last year.

In England and Wales, 1,953 businesses went bust, according to the Insolvency Service, compared with 2,286 in August 2023. The figures included 279 compulsory liquidations – when a company is forced to shut down, usually because it has debts it cannot pay.

Jennifer Lockhart, partner at law firm Brabners, commented: “Fewer businesses failing is always to be welcomed but overall insolvency levels continue to reflect the challenging environment businesses are operating in. Indeed, while their costs are more predictable than they have been for a number of years, interest rates remain persistently high“

"At the same time, the general sense of optimism felt at the start of the summer, with the change of government, has begun to ease, serving to curb the recent improvement in consumer confidence.' Meanwhile, companies on the Companies House register of firms went insolvent at a rate of 55.5 per 10,000 companies in the 12 months to August. This was a slight increase from the 55.4 per 10,000 companies for the same period the previous year.

The Insolvency Service only records figures for England and Wales, but Scotland also saw a 9% decrease versus August last year to 102 insolvencies, according to the Accountant in Bankruptcy, its equivalent government agency. In Northern Ireland, insolvencies decreased by 8% compared to the previous year, although this percentage change is less reliable due to the small number of companies involved, with only 11 going bankrupt during the month.

Giuseppe Parla, insolvency partner at Menzies, commented: “As the country waits for the budget in October, inflation remaining at 2.2% and the Bank of England holding the base rate at 5%, it comes as no real surprise that corporate insolvencies are on a slight downward trajectory.

"Whilst the numbers are still higher than those seen during the Covid-19 pandemic and between 2014-2019, it is uncertain as to whether we will continue this trend or if it is the calm before the storm. It is likely that many company directors are awaiting the outcome of the Budget to decide what their next steps may be."