A toxic combination of economic factors is pushing a growing number of UK companies towards insolvency and potentially liquidation.
That’s according to a new set of figures that shows financial distress levels have been rising among businesses across the country in recent months.
There are now understood to more than 600,000 British businesses in a position of significant financial distress, which is 4 per cent up on the same number a year ago.
Meanwhile, the number of County Court Judgements (CCJs) being served in the final three months of 2022 was up by 52 per cent compared to the same period in 2021.
Those figures have been compiled by the corporate insolvency experts at Begbies Traynor, who have said that for a lot of companies the “legacy impact of Covid debt” is having a lingering and significant impact.
At the same time, inflationary pressures are pushing up costs and consumers across the country are generally needing to rein in their spending, which has knock effects for most consumer-facing businesses.
Rising energy bills too are being cited as a major ongoing financial headache for most UK companies, with those extra pressures potentially set to push a significant number of businesses towards voluntary liquidation in the coming months.
Indeed, Begbies Traynor’s experts have suggested that the UK could soon see a wave of corporate insolvency cases if current trends continue.
“We’re taking calls from company bosses who are having trouble digging deep enough to keep battling on,” explained Julie Palmer from Begbies Traynor.
“They are already having to pay back the support they took to get through Covid and, anecdotally, we are hearing that both the government and HMRC are becoming more determined in pursuing debts, while other creditors are increasingly turning to the law to recover their debts,” she added.
Ms Palmer also noted that with inflation running at around 40-year high and interest rates on the rise, companies are increasingly finding their debts to be a huge and sometimes unbearable burden.
The advice from insolvency and liquidation experts is always for company directors to seek guidance and support from relevant professionals in the field if their business is struggling to stay afloat financially.
