Business insolvencies have reached their highest level since the aftermath of the great financial crisis, official figures show.
There were 22,109 insolvencies in 2022, the highest number since 2009 and a 57% increase from 2021, when 14,059 companies went bankrupt.
Businesses are reeling from the end of pandemic relief packages, which provided a lifeline for small businesses during lockdowns.
The construction, retail, accommodation and food service sectors were hardest hit, with companies in these industries coming under severe pressure from rising costs, staff shortages and weakening consumer demand.
The increase was driven by creditor voluntary liquidations, which occur when directors choose to place a company in liquidation.
These reached 18,821, their highest level since records began in 1960.
Administrations, where a struggling company has failed but can ultimately continue to operate as a going concern, rose 54.6% to 1,231.
The findings suggest that the business landscape is undergoing a correction after pandemic relief packages kept many businesses alive that might have collapsed sooner.
The number of company insolvencies increased considerably, but this partly reflects the higher number of active companies.
For its part, the company liquidation rate rose to 49.5 per 10,000 active companies. This is up from 32.9 a year earlier and the highest since 2015, but only around half the level seen in 2009.
Catherine Atkinson, director of restructuring and forensics at professional services firm PwC, said: “The Insolvency Service report… is a clear reflection of the challenges that companies have faced and will continue to face in the first quarter of 2023. .
“Financial headwinds caused by business costs, rent, interest rates and utility bills, along with other operational pressures, are placing an increasing burden on businesses bearing the pressures of capital. while they wait for payments for goods and services to arrive…The next few months will be a critical time for business resilience.”
