After several false dawns, it looks like the UK could finally experience a sustained slowdown in company insolvencies soon. While March had seen hope return after a brief upturn in fortunes, it was quickly snuffed out by April’s increase in businesses falling to crippling debts.
May’s statistics look more promising than March’s though. Standing at 2,006, the amount of registered company insolvencies in England and Wales is fewer than both last month’s (2,144) and May 2023’s (2,547) numbers. While the 6% decrease in insolvencies from April’s numbers is, of course, welcome, it’s the 21% decrease from the same time last year that really generates optimism.
“A small bounce back”
Forbes Burton’s Senior Client Manager, Ben Westoby, agrees that these latest statistics could provide reason for cheer for the UK economy. Discussing the released statistics, Westoby said “April’s statistics deflated many hopes for a sloping graph of decreasing insolvencies, but this latest report has shown that a small bounce back may well be underway.
“While we may have to endure a few more months like April which saw increases all round, the hope is that 2024 could end on a similar number of insolvencies to 2023. This may not initially sound like cause for celebration given the high figures recorded last year, but the slowing of year-on-year increases will allow many a sigh of relief”.
A shifting trend?
Indeed, by following so quickly from March’s positive figures, the numbers appear less to be outliers and more like a shifting trend. Of course, this early on, much will depend on how businesses fare in the next few months, but at the moment, there’s hope where there was previously little.
Looking at external factors, there is the possibility that the more clement weather we see moving into summer has boosted businesses. The perpetually beleaguered hospitality industry normally sees an uptake in business during this period, as do companies based in seaside towns and other tourist hotspots. The two bank holidays could have also played a factor.
Breakdown
Of the 2,006 insolvency cases recorded, May’s statistics are broken down as follows –
- 1,590 were creditors’ voluntary liquidations (CVLs)
- 271 were compulsory liquidations
- 126 were administrations
- 19 were company voluntary arrangements (CVAs)
Of these, each method of insolvency proceedings recorded lower numbers than the month prior as well as those seen in May 2023. This is apart from compulsory liquidations. While there were fewer compulsory liquidations in May than the same month last year, there was actually an increase from April’s figures.
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