Company insolvencies in England and Wales reach thirteen year high

Company insolvencies in England and Wales reach thirteen year high

Insolvencies decreased in 2020, when government support to businesses was in place during the coronavirus pandemic

Total company insolvencies in England and Wales in the second quarter of 2022 reached their highest quarterly level since 2009, according to the latest figures published by the Office for National Statistics (ONS).

The ONS said the rise had been driven by creditors’ Voluntary Liquidations (CVLs). CVLs accounted for 89% of all company insolvencies in England and Wales between Quarter 1 2021 and Quarter 2 2022. CVLs are the most common company insolvency in England and Wales and are typically used by small businesses going insolvent.

A CVL is a type of insolvency whereby shareholders of a company pass a resolution that the company be wound up voluntarily. While CVL numbers are now higher than pre-pandemic levels, numbers for other insolvency procedures, such as compulsory liquidations for companies and bankruptcies for individuals, remain lower.

Insolvencies decreased in 2020, when government support to businesses was in place during the coronavirus (COVID-19) pandemic; average quarterly insolvencies since Quarter 1 (Jan to Mar) 2020 are slightly lower than the 2015 to 2019 average.

More than 1 in 10 UK businesses reported a moderate-to-severe risk of insolvency in August 2022. The Office for National Statistics (ONS) Business Insights and Conditions Survey (BICS) asks businesses about their perceived risk of insolvencies. More than 1 in 10 (11%) respondents across all businesses saw a moderate-to-severe risk of insolvency in the BICS wave 63, spanning a survey period between 8 and 21 August 2022.

This is lower than that recorded at the start of 2021, when around 20% of businesses responding to the BICS from this category reported a moderate-to-severe risk. The figure has remained below 15% on average since summer 2021 for the all businesses category. It is worth noting that the BICS reports the perceived risk of insolvencies, and it is not guaranteed that a business highlighting the risk actually goes insolvent.

Company insolvencies in the second quarter of 2022 amounted to 5,629; however, this was still lower than the peak of 6,943 reached in Quarter 4 (Oct to Dec) 2008 during the global financial crisis.

In August this year, 22% of businesses said energy prices were their main concern, which is an increase from 15% in late February 2022; in firms with 10 to 49 employees, the figure was 30%.

In England and Wales, construction, manufacturing, accommodation and food service activities, and wholesale and retail trade industries together accounted for more than half of total business insolvencies in the first half of 2022

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