While business failure rates improved in September, with 1,967 corporate insolvencies compared to August's 2,308, the number of firm's collapsing was still 17% up on September 2022.
The first half of 2022 saw around 13,000 corporate failures across the UK, which PwC blamed on high inflation and the impact of an increasing cost base on both liquidity and shareholder value.
Catherine Atkinson, PwC’s restructuring and insolvency practice director, said that compulsory liquidations were also high in September, with 469 creditors’ petitions to wind up affairs, up from 398 in September 2022, and well above 2023’s monthly average of 407.
She said: “Despite the recent fall in the inflation rate it remains significantly above the long term average.
“External conditions remain very difficult for many companies who are having to juggle sustained increases in operational costs; worries about consumer demand; and challenging market conditions alongside increased borrowing costs.
“We expect that insolvency levels will remain high and that creditors will continue to take action to recover outstanding debts by petitioning to wind up struggling companies.”
Ian Carrotte of print sector credit checking specialist ICSM, said it was no surprise that insolvencies were high.
He told Printweek: “In years to come it is possible that the years 2023-2025 will be seen as the hangover years following a perfect storm of problems for the UK economy.”
Historic debt, pandemic shutdowns and then loans, the Russian and Israeli wars, China’s faltering economy, high interest rates and inflation, Brexit, and Liz Truss’ disastrous mini-budget are just some of the factors combining to flatten the UK economy, he said.
“However,” he added, “despite these challenges the UK and most western economies are very resilient as they are complex with a wide range of sectors. Even in the gloomiest of times some industry sectors do well which help to buoy up the economy as a whole.
“Take the 1970s when oil exploration in the North Sea boosted the Scottish economy, when motorways were being built across the country and despite the strikes car manufacturing was higher than any decade since until now, when finally the numbers are up.”
The print industry, Carrotte added, has a particular problem with insolvencies in 2023, as opposed to 2022, as many companies’ Covid loans have come to maturity, squeezing cashflow.
He said: “Do the insolvency figures herald a recession or a further flatlining of the economy – we will have to wait and see, but certainly times are tough in the print industry for those with inky fingers.
“Those who have minimised debt, kept ahead with the technology and with industry trends tend not to feature so much in those depressing insolvency figures.”
