The number of UK companies that registered as insolvent in September is the highest since the start of the pandemic, according to government figures.

Data from the Insolvency Service showed there were 1,446 company insolvencies across England and Wales in September and this is up from 1,349 in August – an increase of 7.2% and 928 from the same time in 2020, which is up 56%.

Included in the business failures figures are a slew of energy firms, including Utility Point, People’s Energy, PfT Energy, and MoneyPlus Energy, and chilled food logistics firm, EVCL.

Warning from Bank of England

The Bank of England has warned that high levels of borrowing during the pandemic have increased business vulnerability. A BoE statement said: “As the economy recovers and government support, including restrictions on winding-up orders, falls away, business insolvencies are expected to increase from historically low levels.”  A recent BoE report found that a third of the UK’s small businesses were classified as highly indebted with debt levels of more than 10 times their cash balances, compared with 14% prior to Covid-19. The government has said it is supporting businesses and has provided some £400 billion of support.

Company Debt Director, Simon Renshaw, says: “It’s notable that there is a significant month on month, and in particular, year on year, increase in the number of insolvencies. The large amounts of government support have provided temporary respite, but in some cases, problems are too severe for restructuring to work. It has been a case of prolonging the inevitable and now the sticking plaster has to come off. I can only see the situation worsening as winter approaches and consumer spending is set to shrink further as people struggle to meet rising fuel bill costs.

“These problems are currently not exclusive to the UK and we can see other European countries experiencing rising levels of business failure. But, with uncertainties about a possible interest rate rise, the ongoing disruption caused by shortages and supply chain problem,s and a fall in sterling’s value all adding to the country’s problem, it is difficult to see matters improving until well in 2022. If company directors have concerns that their business may be insolvent, or they need guidance on what recovery options could be, then we are available to discuss their situation in confidence.”