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September sees highest number of insolvencies since pandemic hit

September saw the highest number of business insolvencies in England and Wales since the pandemic started in March 2020.

The increase was partly due to the ending of various government schemes designed to protect jobs, including furlough, according to industry experts. Lack of consumer confidence, and thus spending, was also cited as a factor.

The number of companies becoming insolvent increased from 1,349 in August, to 1,446 in September 2021 – a figure 56% higher than the same month in 2020.

37,000 firms could ‘go bust’ before 2023

While 18,900 companies were saved from insolvency in 2020, researchers at insurance company Euler Hermes told City AM that “37,000 businesses are set to go bust before 2023.”

Personal insolvencies rose by 9.2% to 9,954 in September 2021 compared with August’s figure of 9,118. The number is 33.2% higher than September 2020’s figure of 7,471.

Nicky Fisher, Deputy Vice President of insolvency and restructuring trade body R3, said the latest statistics show that the economic effects of the pandemic are continuing to take a toll on businesses and consumers.

‘Rocky road ahead’ expected 

“The dramatic increase in corporate insolvencies compared to this time last year – to the highest level since January 2020 – illustrates just how crucial the Government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for the business community now it has ended,” she said.

“The monthly increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations, which increased for the third consecutive month. This suggests that directors are choosing to close their businesses after deeming their financial survival unlikely after 18 months of trading through a pandemic.”

Cautious consumers and supply chain issues pose further challenges

She added: “Consumers are now increasingly cautious about the state of the economy, their personal finances and the increased cost of living and are more wary about spending their money. 

“And with widespread supply chain disruption and significant wholesale energy price increases building up between September and October, there is likely to be little slack in the system for businesses and individuals who have yet to get back on their feet following the impact of Covid.”

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