UK company insolvencies spike in February as firms remain under pressure

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Greater than 2,000 UK corporations went bust final month, practically a fifth greater than the identical time final yr, in accordance with new figures which make clear the challenges going through under-pressure companies.

The extent of firm insolvencies spiked in February with cosmetics chain The Physique Store among the many excessive avenue manufacturers to break down into administration.

The variety of registered firm insolvencies in February was 2,102, a 17% enhance on the identical month in 2023, knowledge from the Insolvency Service confirmed.

It’s increased than ranges seen throughout the Covid-19 pandemic, when Authorities help measures have been propping up struggling corporations, and better than pre-pandemic numbers.

It indicators that British companies are nonetheless grappling with powerful circumstances after firm insolvencies hit a 30-year excessive in 2023, with greater than 25,000 corporations going bust throughout the yr.

Development companies confronted probably the most casualties final yr, because the sector confronted a protracted slowdown amid hovering mortgage prices and supplies inflation.

The Physique Store was a high-profile firm to name in directors in February, subsequently asserting the closure of practically half of its UK shops.

The retailer, which was based in 1976, had confronted years of economic struggles amid a more difficult backdrop for customers.

David Hudson, a restructuring advisory companion at FRP, mentioned: “Reasonably than recent begins, the spring brings with it extra challenges for already distressed companies, notably these within the strained retail and hospitality sectors.

“Regardless of hopes of some respite from the Chancellor in final week’s Funds, many will see massive rises of their enterprise fee payments from the beginning of April in addition to having to shoulder elevated wage prices as the brand new Nationwide Residing Wage takes impact.”

He added that regardless of hopes of a short-lived recession, the monetary challenges mixed with increased borrowing prices and weak shopper confidence proceed to “weigh closely” on UK corporations.

The UK economic system fell right into a recession on the finish of final yr, in accordance with official figures, which is outlined as two consecutive quarters of adverse development.

However the economic system returned to development in January, elevating hopes that it may already be on its means out of the downturn.