UK corporate insolvencies increase 1.5% in September

Corporate insolvencies in the UK increased by 1.5% in September 2024 from the previous month, according to the latest data from the Insolvency Service.

The total number of corporate insolvencies stood at 1,973 compared to August’s total of 1,943, and decreased by 7.4% compared to September 2023’s figure of 2,130. 

Corporate insolvencies also increased by 14.3% compared to September 2022’s 1,726 figure.

Personal insolvencies increased by 6% in September 2024 to a total of 10,651 compared to August’s total of 10,046, and increased by 44.5% compared to September 2023’s figure of 7,372. 

The number of personal insolvencies also increased by 12.6% compared to September 2022’s figure of 9,462.

“Although corporate insolvencies have only risen by a small percentage compared to last month, the business climate remains difficult as firms face a multitude of issues including ongoing cost challenges, uncertainty around announcements in the Budget and the potential knock-on effects of the conflict in the Middle East.

“Firms are worried about the impact future tax rises could have on their bottom lines, and members are telling us that there’s an increased demand for advice and support around Member Voluntary Liquidations as directors look to take steps to reorganise their business and its finances ahead any potential tax changes in the Budget. 

“The conflict in the Middle East will likely affect UK businesses. Increased instability in the region could disrupt trade routes and supply chains, affecting businesses that rely on imports or exports from the Middle East. Businesses will have to weigh up whether they pass any cost increase onto customers or absorb it themselves. This is particularly relevant for sectors like energy, manufacturing, and retail.

“In terms of the figures, the marginal monthly increase in corporate insolvencies is due to an increase in Creditors’ Voluntary Liquidations and Administrations, while the year-on-year reduction in numbers is due to a fall in Creditors’ Voluntary Liquidations and Compulsory Liquidations.

“These figures also show that Administration numbers have increased compared to last month and this time last year. This suggests directors are seeking early advice, which is something R3 has been campaigning for since 2020. Seeking early advice means there are more businesses that have the potential to be rescued via a sale out of Administration – the preferred outcome of an Administration process for members of the profession, who always seek to rescue a business wherever this is possible. 

“If directors are proactive at seeking advice when the first signs of financial distress present themselves, we could see CVL numbers reduce in the medium-term and more businesses entering administration in the hope of being rescued through a sale.”

“Despite these issues, there has been some positive news for certain key sectors of the economy, with news of construction output increasing, retail sales volumes continuing to rise in August and consumers spending more in the hospitality sector last month. Firms in these sectors have had a challenging year and they will be hoping this is the prelude to a strong finish to 2024.”