Corporate insolvencies increased by 51.2% in May 2023 to a total of 2,552 compared to April’s total of 1,688, and increased by 39.8% compared to May 2022’s figure of 1,825.
Corporate insolvencies increased by 151.9% from May 2021’s total of 1,013 and by 170.3% from May 2020’s total of 944.
Corporate insolvencies also increased by 89.3% compared to pre-pandemic levels in May 2019 (1,348).
Personal insolvencies increased by 10.7% in May 2023 to a total of 9,962 compared to April’s total of 9,002, and decreased by 5.1% compared to May 2022’s figure of 10,499.
Personal insolvencies increased by 17.3% from May 2021’s total of 8,496 and decreased by 28.1% from May 2020’s total of 13,855.
Personal insolvencies also decreased by 9.3% compared to pre-pandemic levels in May 2019 (10,989).
Eleanor Temple, chair of the UK’s insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to the publication of the May 2023 personal and corporate insolvency statistics for England and Wales:
“Three years of economic turmoil is taking its toll on businesses. The corporate insolvency figures published today are the highest we’ve seen since January 2019 as the fallout from battling the effects of the pandemic, coupled with rising costs, increased creditor pressure, and high inflation, is causing more businesses to turn to an insolvency process to help resolve their financial issues.
“The key driver of the rise in numbers is the increase in Creditors Voluntary Liquidations, which are also at a near-four and half year high and more than twice the number they were in May 2019. More and more directors are running out of time and options, and are choosing to liquidate their businesses before the choice is taken away from them.
“Firms are operating in a market where people are spending cautiously, costs are increasing and suppliers are chasing debts in an attempt to manage their own cashflow challenges, which is creating a tough climate for businesses of all sizes at a time where they needed an injection of cash.
“While the summer months might provide some relief from energy costs, firms will have to pay to keep their premises, staff and customers cool, which will hit any potential savings.
“Going forward, interest rates and inflation will continue to create challenges for businesses seeking funding over the summer, and could be the tipping point for those businesses who are hanging in there at present.
“Directors need to remain vigilant to the signs their business could be distressed and seek advice if they start to see stock levels increase, cashflow become an issue, or begin to experience issues paying rent, staff or bills.
“Turning to personal insolvencies, the monthly increase we’ve seen in the figures published today is driven mainly by a rise in the number of people entering an Individual Voluntary Arrangement and a Bankruptcy.
This monthly increase is likely to be the result of last month’s backlog of cases being resolved, but does also show the effect the cost of living is having on people’s finances and their ability to remain solvent.
“Money worries are still a key concern for many people. Food and energy costs are the largest concerns, and people are avoiding spending on anything other than the essentials as they focus on paying their bills.
“While consumer confidence has improved, both in the short-term and compared to last year, people are still worried about the economy and their finances, and reluctant to make any major purchases.
“Over the summer, inflation and interest rates could cause problems for people looking to take out or renew mortgages and may be the pinch point for those who are just about managing right now.
“We urge anyone who is worried about their finances to seek advice from a qualified source as soon as possible. Talking about your concerns about your finances is very hard, but having the conversation at an early stage will give you more options for improving your situation, and more time to take a decision about your next step.”
