Company insolvencies more than doubled last month as soaring inflation and rising borrowing costs pushed firms over the edge.
Official figures released today showed that 2,114 firms in England and Wales registered for insolvency in March, up from 1516 in February and 999 in March 2021.
The first quarter of this year notched up the highest number of company insolvencies since the third quarter of 2017.
Tax and accountancy firm Mazars said UK firms were feeling the squeeze as interest rate hikes had left some firms unable to service debt.
“Businesses that were just hanging on before the recent interest rate rises have seen the rise in borrowing costs push them over the edge,” said Rebacca Dacre, partner at Mazars.
“Between interest rates and inflation, this is the most difficult period for businesses since the height of the pandemic. This time they are having to manage without government support.”
The figures revealed 1,844 Creditors’ Voluntary Liquidations (CVLs), when firms voluntarily elect for liquidation – more than double the number in March 2021 and 62 per cent higher than March 2019.
There were almost four times as many compulsory liquidations in March 2022 compared to March 2021, and the number of administrations was 74 per cent higher than a year ago.
Rising borrowing costs have been compounded by soaring energy prices and moves from HMRC to recover cash from firms that failed to agree a ‘Time to Pay’ arrangement.
The Insolvency Service said today that until-2021 insolvency figures had remained suppressed on pre-pandemic levels due to high levels of government support.
But support measures were slashed in September last year with all of the remaining measures coming to a close on 31 March 2022.
Mazars warned that the withdrawal of support meant that further insolvency surges could be expected in the coming months.