UK insolvencies climb to 14% in ’23 amid high interest rates

The number of UK companies that are going bust has soared 14 per cent in 2023 as a result of higher borrowing costs and weaker economic growth.

According to the government’s Insolvency Service, retail, construction, and hospitality firms helped to drive total company insolvencies up to 25,159 in 2023.

There was a 2 per cent year-on-year rise in December, which is typically a low month for insolvencies.

The figures show growing strains on firms after a lull in the coronavirus pandemic period when protection measures were in place. It signals higher borrowing costs and a stagnating economy, with the number of firms failing almost 50 per cent higher last year than in 2019. Policymakers watch the data for signs of job losses that could contribute to a wider impact on the outlook for the UK.

“It’s fair to say that 2023 was a particularly challenging year,” Sarah Rayment, co-head of restructuring at Kroll, told Bloomberg.

“Over the past 18 months, with a combination of higher inflation, higher energy bills and higher interest rates, we’ve unfortunately seen many companies fail, especially so-called zombie businesses.”

According to PwC, some 98 per cent of the extra 3,000 insolvencies in 2023 were from smaller companies with annual turnover of less than £1 million.

The construction, hospitality, and retail sectors were among those to suffer the most insolvencies during November, the latest figures for the industry breakdown.