UK company insolvencies spike in February as firms remain under pressure

At no cost actual time breaking information alerts despatched straight to your inbox signal as much as our breaking information emails

Signal as much as our free breaking information emails

Greater than 2,000 UK companies went bust final month, almost a fifth greater than the identical time final yr, in line with new figures which make clear the challenges dealing with under-pressure companies.

The extent of firm insolvencies spiked in February with cosmetics chain The Physique Store among the many excessive avenue manufacturers to break down into administration.

The variety of registered firm insolvencies in February was 2,102, a 17% enhance on the identical month in 2023, knowledge from the Insolvency Service confirmed.

It’s greater than ranges seen through the Covid-19 pandemic, when Authorities help measures had been propping up struggling companies, and better than pre-pandemic numbers.

It alerts that British companies are nonetheless grappling with robust circumstances after firm insolvencies hit a 30-year excessive in 2023, with greater than 25,000 companies going bust through the yr.

Building companies confronted essentially the most casualties final yr, because the sector confronted a protracted slowdown amid hovering mortgage prices and supplies inflation.

The Physique Store was a high-profile firm to name in directors in February, subsequently saying the closure of almost half of its UK shops.

The retailer, which was based in 1976, had confronted years of economic struggles amid a more difficult backdrop for consumers.

David Hudson, a restructuring advisory companion at FRP, stated: “Slightly than recent begins, the spring brings with it further challenges for already distressed companies, significantly these within the strained retail and hospitality sectors.

“Regardless of hopes of some respite from the Chancellor in final week’s Price range, many will see giant rises of their enterprise price payments from the beginning of April in addition to having to shoulder elevated wage prices as the brand new Nationwide Dwelling Wage takes impact.”

He added that regardless of hopes of a short-lived recession, the monetary challenges mixed with greater borrowing prices and weak client confidence proceed to “weigh closely” on UK companies.

The UK financial system fell right into a recession on the finish of final yr, in line with official figures, which is outlined as two consecutive quarters of detrimental progress.

However the financial system returned to progress in January, elevating hopes that it may already be on its manner out of the downturn.