Insolvencies in England and Wales have continued to rise in 2024, following on from a tough 2023 that saw the highest number of collapses since 1993.
In January, there were 1,769 insolvencies, representing a 5% jump year-on-year and highlighting the impact of interest rate hikes, weaker consumer spending and higher input costs.
2024’s figure marked the highest level of insolvencies in January in the last five years, with more businesses closing now compared to the pre-pandemic.
Last year, 2023, saw the highest number of insolvencies in thirty years, with the speed of active companies going bust the fastest seen since the middle of 2014.
David Hudson said: “The relentless rise in insolvencies continues, and we don’t expect it to slow anytime soon.
“A real concern is that current financial distress spreads further. Last year’s insolvency data shows a large proportion of Creditor’s Voluntary and compulsory liquidations – a sign that many of the closures were among SMEs.”
He noted that if more mid-level companies were to start going bust it could result in wider ramifications for both up and down the supply chain.
“Early interest rate cuts still look unlikely, meaning capital and debt costs will remain high for some time yet,” Hudson added.
Hospitality and retail businesses are facing some of the greatest challenges, with the rise of the national living wage expected to add to the multitude of headwinds facing the sectors.
Earlier this month, it was revealed both industries would see the largest number of insolvencies in 2024.
The Centre for Economics and Business Research said around 33,000 closures would occur in 2024, with pandemic-led problems catching up to these types of businesses.