The number of companies going bust every month remains at elevated levels, pointing to the continued pressure businesses are facing from higher interest rates and sluggish demand.
Figures released by the Insolvency Service showed that 1,973 firms went bust in September, two per cent higher than August but seven per cent lower than the same month last year.
The release noted that monthly insolvency numbers so far in 2024 have been similar to 2023, which saw the highest annual number of insolvencies since 1993.
Voluntary liquidations made up 80 per cent of all insolvencies in September.
Compulsory liquidations, which only make up a small portion of insolvencies, were down 18 per cent month-on-month and 13 per cent year-on-year.
Still, the number of compulsory closures remained ahead of 2019 levels.
Source: The Insolvency Service
The number of liquidations has remained high even as the broader economy has shown signs of improvement, with inflation back under control and a rate cutting cycle slowly getting underway.
Crunch Budget for businesses
David Hudson, restructuring advisory partner at FRP, said an improvement in economic conditions has “not been nearly enough to compensate for the pressure that’s been gradually building in some businesses for months, even years, now”.
Many commentators warned that the Budget would be a crucial moment for businesses, with Chancellor Rachel Reeves reportedly considering a slew of tax hikes.
Businesses are nervous that the Chancellor will lift employer national insurance contributions to help put the public finances on surer ground.
Rain Newton-Smith, director general of the Confederation of British Industry (CB) said that “employers see [it] as a difficult move”, especially in the context of recent minimum wage hikes, and planned rises to business rates.
Oliver Collinge, director at firm PKF Littlejohn said the Budget will be a “significant moment” for firms. “A possible increase in Employers National Insurance contributions would be an unwelcome development for businesses that are already on the edge,” he added.
The Centre for Economics and Business Research (CEBR) suggest there could be as many as 33,000 insolvencies this year, surpassing 2023’s 30-year high