Pandemic hangover continues as corporate insolvencies increase by over a quarter - report

A challenging trading climate and an economic hangover from the pandemic continue to fuel huge increases in the number of corporate insolvencies in England and Wales, with monthly levels significantly higher than they were pre-pandemic.

This is according to the Midlands branch of the UK 's insolvency and restructuring trade body R3 and comes on the back of latest figures from the Insolvency Service which show that the number of corporate insolvencies in June jumped by 27.4 per cent to 2,163 compared to June 2022 's total of 1,698, and by 79.4 per cent from June 2021 's total of 1,206.

The data also shows that corporate insolvencies increased by 191.9 per cent from June 2020 's total of 741 and by 47.5 per cent compared to the June 2019 pre-pandemic figure of 1,466.

R3 Midlands chair Stephen Rome (pictured), a director of law firm Thursfields in Birmingham, said: “Corporate insolvency levels are well above what they were this time last year - and two, three and four years ago, as the hangover from the pandemic combines with a challenging business climate caused by a number of economic issues.

“Firms are trading in a time of cautious consumer spending and rising costs, which are hitting margins and profits hard. Here in the Midlands, directors are expecting wages and costs to rise further as the year goes on. If these aren 't matched by more demand for goods and services, it could be the final blow for those companies which are just managing to keep their head above water.

“Rising interest rates are another potential challenge, as that will make the cost of borrowing more expensive and may price some firms out of the survival funding they 'll need to thrive.

“Given the current economic and business climate, we urge directors to be alert to the signs of financial distress and to seek advice if they start to see stock levels increase, cashflow become an issue, or if there are issues paying rent, staff or bills. Seeking appropriate support as early as possible will give more potential solutions than acting only when problems become more severe. ”