UK firms feeling the pressure

Data from PwC show the number of UK firms filing for insolvency in the first quarter was broadly similar to the same period in 2021.

However, the analysts show that when the smallest firms and companies that were liquidated when solvent are stripped out, the figures show those filing while insolvent more than doubled in the first quarter, and early indicative data for April shows a 21% rise from last year.

PWC says that it’s a trend that is unlikely to abate as higher energy and material costs rise to make life harder for the UK’s businesses. Inflation is already at a 40-year high and unlikely to ease quickly. On top of that, measures to help businesses survive the pandemic, including relief from landlords looking to collect unpaid rent, ran out in April.

For the first quarter of the year, the most marked uptick in the number of insolvencies was in the North-East and Yorkshire region of England, with a 52% rise in total insolvency numbers. London saw a decrease for the first three months, with around 500 fewer than a year earlier.

David Kelly, Partner in PwC’s business restructuring business, said “Inflation, supply chain problems, labour shortages and energy costs are all likely to make life harder for the UK’s businesses.”

‘Government support was removed and now we have moved into an environment where there are quite a number of significant economic headwinds,” David Kelly, a partner in PwC’s business restructuring business, said in an interview. Inflation, supply chain problems, labor shortages and energy costs are all likely to make life harder for the UK’s businesses.”