Business insolvencies have increased by 72% over the past year

UK company insolvencies have increased by 72% in the past year with over 20,000 companies going out of business according to analysis from international audit, tax and advisory firm Mazars.

The figures show that insolvencies increased from 11,949 to 20,512.

Latest Insolvency Service figures indicated that 1,933 companies entered insolvency with pubs, bars and restaurants amongst the hardest hit.

The analysis found that the hospitality sector has been hit especially hard, with 216 insolvencies of pubs, bars & restaurants in just the last month – up 37% from 158 in July. Over the past year, insolvencies of pubs, bars and restaurants have increased 59%, from 1,354 to 2,156. Spikes in energy bills seen in the sector are forcing many to consider closure.

Businesses have increasingly struggled to pay their energy bills, which have spiralled since the start of the year. Unlike households, businesses’ energy bills are not capped.

Adam Harris, Partner at Mazars said “Many UK businesses were already in a weak position before energy prices surged. The size of energy price rises was always likely to cause some businesses to close but the scale and pace of these insolvencies is especially concerning.”

“Small business owners in particular are struggling under the weight of multiple crises, often without the resources or financial cushion to see them through.”

“The hospitality sector is facing an unusually challenging environment as the cost-of-living crisis hits them from both sides. Just as their energy costs are spiral and their interest costs rise their customers are cutting spending on non-essentials such as eating out.”

“The Government’s upcoming energy package will be key to determining whether many businesses survive. Unless the picture dramatically changes, we are likely to see many more businesses close their doors in the months to come.”