Following the March company and individual insolvency statistics published by The Insolvency Service this morning, financial industry experts have commented.
Ian Hepworth, director of Croydon-based Funding Solutions UK: “Increasing insolvencies are sadly a sign of the times, as macroeconomic headwinds continue to bite. The withdrawal of government support from businesses, higher interest rates, stubbornly high inflation, wage demands and supply chain disruption have proved too much for many firms, and they are folding as a result.”
Bradley Lay, a business finance adviser at Bradley Lay: “This latest insolvency paints a bleak and ominous picture of the economic landscape. These numbers reveal a concerning reality for businesses and individuals alike. The rise in registered company insolvencies, compulsory liquidations and Creditors’ Voluntary Liquidations all points towards a downward spiral that seems unstoppable. The number of bankruptcies filed by individuals has also increased, with Debt Relief Orders (DROs) skyrocketing by a staggering 35%. The only glimmer of hope is the decrease in the number of Individual Voluntary Arrangements (IVAs), which may be due to a lack of options available for people in dire financial straits. The future feels bleak and the economic climate is only going to get worse. During the past few years we have seen extreme uncertainty and instability in the UK economy, and it seems that this is a trend set to continue for several more years.”
Mark Grant of Gloucester-based business finance broker, The Business Finance Branch: “Every business that fails is a tragedy for the owners and staff involved. There is encouragement to be taken from the insolvency data compared to 2022 and earlier years in that the rate of failure is not increasing as it had been forecast to do. We are seeing many clients proactively getting ahead of their liabilities where they can and lenders are willing to support viable cases. The future is brighter than had been forecast for many.”
Marcus Wright, managing director of Bolton Business Finance: “Sadly we are seeing an increase in businesses with large amounts of short-term borrowing that have simply run out of road. Energy bills in particular are hitting businesses seriously hard in some sectors like restaurants and hospitality. Add into that inflation and a less forgiving HMRC, and it means we will see far higher insolvencies this year. 2023 is shaping up to be a year to forget.”
Ed Rimmer, CEO of Bath-based SME finance provider, Time Finance: “Insolvencies are the inevitable outcome of an unsustainable situation as more and more businesses struggle to make ends meet. Running a business is difficult enough, but having to contend with high inflation, soaring costs, supply chain challenges and weakening consumer demand is a rut many businesses simply can’t get out of. The real statistics we should be focusing on are how many businesses we can look to save by putting the right financial support and backing in place. This is something the Government must prioritise to ensure that we prevent more perfectly viable businesses from going under.”
Debbie Porter, managing director of Bakewell-based Destination Digital Marketing: “It’s not surprising to see an increasing number of insolvencies, at both the personal and company level. As a nation we’ve been through one turmoil after the other in the past three years. We now have a 9.68% hike in the national minimum wage and a corporation tax hike from 19% to 25% as of this month. Small businesses, which make up the majority of all businesses that are trading in the UK, cannot keep accepting increases in costs across the board like this and still remain profitable. All businesses are in business to be profitable, so once this is taken away, inevitably businesses will fold. People then lose their jobs and join the unemployment line, getting into debt to try and keep up with the cost of living in the meantime. Much is said of the cost-of-living crisis, so the government’s focus on macroeconomics and refilling the coffers through taxation seems really out of step with much of the population’s lived experience.”