March’s promising-looking decrease in insolvencies proved to be a false dawn. April’s figures have soon put paid to any hope that the tide was beginning to change on the UK business landscape.
The 2,177 insolvencies recorded in April marked an 18% increase from both March 2024’s figures (1,838), and April 2023’s numbers (1,838). After the previous month had reported decreases in both the month-to-month and year-to-year statistics, this news may come as a disappointment to those hoping for a sea change.
“Wishful thinking”
Senior Client Manager and Consultant, Ben Westoby, suggests that previous years’ figures should have prepared us for this rebound. “We can see from the last couple of years that a similar trend has occurred” he explains, “A springtime dip has been experienced before, only to quickly return to previous levels afterwards.
“This may have something to do with companies trying to time their closure to tie in with the end of the financial year. By concentrating the number of insolvencies around one date, the month inevitably pulls in companies that would otherwise have been declared insolvent in a different month.
“Perhaps a turning of a corner is wishful thinking at the moment, given the multiple economic headwinds that UK companies still face”.
No reason to slow
Indeed, with no change in fuel prices, rents, or imported goods, there are no real reasons why the pace of insolvencies should slow. Until at least one of the external threats to UK businesses is resolved, we’re unlikely to see too much of a difference in insolvency figures. The Russian invasion of Ukraine continues unabated, as does the Cost-of-Living Crisis which serves as a double issue for businesses. While companies struggle to afford the increased operating costs of trading, they also find their customers simultaneously tightening their belts for the same reason. Add the ongoing tension in the Red Sea increasing shipping costs to the mix, and you can see how insolvency numbers are unlikely to dwindle just yet.
Insolvency breakdown
April’s insolvency figures across England and Wales can be broken down as follows:
- 300 compulsory liquidations
- 144 administrations
- 18 company voluntary arrangements (CVA)
- 1,715 creditors’ voluntary liquidations
Elsewhere, Scotland recorded 109 company insolvencies, and Northern Ireland saw 33 logged. While 33 seems like a relatively small figure compared to those in England and Wales, it actually represents a 267% increase on the number of insolvencies in the same month last year.
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