More companies in England and Wales declared bankruptcy in March than at any other time since monthly records began three years ago, according to official figures released on Tuesday, which showed a 16% spike from a year earlier.
2,457 corporate insolvencies were reported by the Insolvency Service Agency in March, up from 1,784 in February.
The rate of companies falling into insolvency fell sharply with the onset of the COVID-19 pandemic, thanks to government support programmes and lockdowns slowing the progress of courts handling insolvency cases.
But with companies facing rising costs and a stagnant economy, insolvencies are again on the rise.
The Insolvency Service said creditors’ voluntary liquidations were the biggest driver of corporate insolvency in March.
“Businesses are struggling to secure financing and pay off their loans due to high interest rates and the wider impact inflation and consumer sentiment is having on sales and cash flows,” said David Kelly, head of insolvency at accountants PwC.
“Company insolvencies will likely continue to rise in the short term, making for a challenging spring,” he added.
Individual insolvencies also rose sharply in March, although were still down slightly on a year ago.
Breathing space applications – which holds off creditor action for 60 days so people in debt can reorganise their finances – rose to a new high in March, following their introduction in May 2021.
“People are still very worried about money and the economy, and are reluctant to spend on anything other than the basics,” said Nicky Fisher, vice president at insolvency and restructuring trade body R3.
Figures on Wednesday are expected to show annual UK consumer price inflation fell below 10% in March, but still far above the Bank of England’s 2% target.