After an almost relentless stream of bad news for UK businesses, The Insolvency Service has finally reported a drop in company insolvencies.
March 2024 saw 1,815 companies file for insolvency. This is not only a 17% drop from the previous month’s statistics, but also a 17% decrease from the numbers reported in March 2023. After a lengthy period of seeing insolvency numbers rise month on month, this news comes as a welcome surprise for UK businesses.
The monthly figures have also been consistently higher than the same period a year prior. That March 2024 has managed to buck both trends then, is hopefully a sign of some much-needed stability. Rising numbers meant that 2023 and the start of 2024 recorded insolvency levels that hadn’t been seen since the worldwide financial crisis of 2008-2009.
A similar pattern?
Before any Champagne bottles are popped though, it’s important to look at how previous years have played out. While March 2023 saw a surge of 2,457 company insolvencies, the following April witnessed a sizeable decrease to just 1,685.
March 2022, meanwhile, also saw a rise from prior months, logging in at 2,120 insolvencies. This too was followed by a decrease in April – 1,988. Both years saw a return to higher figures instead of a trend downwards.
It’s possible that we’re merely experiencing the same springtime dip as previous years, just a month earlier. Regardless, though, a relative reprieve in soaring insolvency rates will be well received.
“A glimmer of hope”
Senior Client Manager, Ben Westoby of Forbes Burton, has a hopeful outlook on the figures reported. He suggests, “a decrease in March is an encouraging sign for the months ahead. Looking at the same month in the previous two years, we’ve seen big numbers filed. The timing of this might suggest that company owners were maybe waiting until the end of the financial year and wrapping things up just beforehand.
“Of course, until we see the figures of the coming months, we won’t know if we’ve finally turned a corner, but it’s certainly provided a glimmer of hope for UK businesses”.
Despite this good news, figures undoubtedly remain high. While the pandemic meant that UK insolvencies hit record lows, they soon started to ramp up quickly during 2021 and 2022. By the time 2023 was over, the UK had experienced the highest amount of company insolvencies since 1993. As such, any decrease may take some time to settle at more comfortable levels then we’re currently seeing.
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