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More than 30,000 British companies went bust last year, with accountants warning of a “double whammy” to come in April that could trigger another wave of insolvencies.
Big businesses were the worst hit, according to a report published Thursday by accountancy giant PwC. Insolvency activity among firms with revenues exceeding £1 million ($1.24 million) rose by more than 20%.
Across all companies, the number of insolvencies climbed from 28,279 in 2021 to 31,606 last year, a jump of nearly 12%.
London was the only UK region to escape last year’s insolvency surge as company failures in the capital declined 6% to 5,400.
Sticky inflation, higher borrowing costs and squeezed household budgets are increasing the number of UK firms on the brink of collapse. A separate report by consultancy Begbies Traynor this week revealed a 36% jump in the number of businesses in “critical financial distress” in the final quarter of 2022, compared with a year earlier.
After surviving the pandemic, businesses are now braced for a twin challenge in April, according to PwC. That’s when many are set to renew fixed energy contracts, as well as trade credit insurance which enables them to extend borrowing terms to suppliers and protects against the risk of failed deliveries.
“This may cause a headache for company directors,” said David Kelly, head of insolvency at PwC UK. “Especially as providers are taking a much more stringent view of extending the cover, which is perhaps understandable as company failures continue to rise.”
Photograph: A worker places a closing down sale sign at the entrance to Jack Wills Retail Ltd. clothing store in Birmingham, UK, on Monday, April 12, 2021. Photo credit: Darren Staples/Getty Images