Company insolvencies in England and Wales jumped by 40% year-on-year over the past quarter as firms faced rocketing costs, higher interest rates and labour shortages.
Official data from the Insolvency Service showed there were 5,595 registered company insolvencies over the three months to September 30.
It was marginally lower than the previous quarter but reflected a 40% jump against the same quarter of 2021.
The Insolvency Service said the figures comprised of 4,800 creditors’ voluntary liquidations (CVLs), 492 compulsory liquidations, 274 administrations and 29 company voluntary arrangements (CVAs).
Compulsory liquidations bounced to their highest levels since the start of the Covid-19 pandemic.
Experts warned that the number of companies entering insolvency processes could worsen in the coming months as inflation continues to bite.
Christina Fitzgerald, president of insolvency and restructuring trade body R3, said: “Two years of economic turbulence are translating into a rise in corporate insolvencies.
“Government support paused rather than prevented the economic effects of the pandemic from leading to more businesses entering insolvency processes, but now that support has ended, we’re starting to see numbers exceed pre-pandemic ones.
“It seems inevitable that numbers will increase in the coming months as the state of the economy, increased costs, and people’s reluctance to spend money because of the cost of living deals a further blow to those businesses that have struggled since the beginning of the pandemic.”
Nicola Banham, insolvency director at Azets, added: “This pressure will continue to build as companies face ever-increasing costs at a time of prolonged economic uncertainty.
“Alongside this, the cost of servicing debt is rising due to increasing interest rates, which are expected to continue to rise and further exacerbate matters.”