Company insolvencies remain high and the outlook remains bleak for many businesses – London Business News | Londonlovesbusiness.com

New data published today by the Insolvency Service shows the number of registered company insolvencies in England and Wales was 1,747 in October 2024, 10% lower than in September 2024 (1,950) and 24% lower than the same month in the previous year (2,293 in October 2023).

However, the Insolvency Service reported that the number of company insolvencies remained much higher than those seen both during the COVID-19 pandemic and between 2014 and 2019.

Mark Ford, Partner in the Restructuring & Recovery team at professional services firm Evelyn Partners said, “Although the latest data shows a dip in the number of company insolvencies compared to last month and the same month last year, we are not out of the woods yet – these numbers are still high based from a historical perspective and monthly figures can be volatile.

“Many businesses remain in a perilous position following a long period of high borrowing costs, high inflation and consumers tightening their purse strings. Businesses aren’t always able to pass on the full extent of cost increases and this has left many saddled with debt. For some it is only time before they run out of cash and cease trading.

“The new UK government entered office with a pledge to focus on growth, but data released last week confirmed that the economy has barely grown in their first three months. Consumer confidence has also been on the slide in recent months and this is making life even more difficult for businesses.

“Unfortunately, the outlook remains bleak for many businesses as they fight to increase sales against a backdrop of sluggish economic growth. The recent Budget provided little comfort to under pressure firms who will now need to plan for rising wage bills after hikes in National Insurance contributions and the minimum wage were announced.

“Businesses will do all they can to pass these costs on to consumers, but this won’t always be possible and we can expect to see many fighting for their survival in the months ahead. Those operating in labour-intensive industries, such as hospitality, healthcare and retail will need to work particularly hard to remain competitive and viable.

“As the Chancellor has herself acknowledged, the Budget announcements are likely to threaten wage rises for employees. Numerous business leaders have also lined up in recent weeks to suggest they may be forced to cut jobs given increases in their wage bills.

“With household finances remaining stretched and job security threatened, businesses may find persuading consumers to part with their hard-earned cash an uphill struggle in the coming months. Consumers delaying spending is the last thing businesses want to hear, particularly for those firms that are already teetering on the edge.

“Companies that are facing difficulties will maximise their chances of rescuing their business and saving jobs if they act sooner, rather than later. Effective management of cash should remain a priority for businesses.”