Summary of 2023 UK Business Insolvencies Statistics

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by Martin Kingman 
| 23 April 2024

Business insolvencies in the UK during 2023 steadily rose, reaching levels not seen in decades.

2023 Trends and Statistics

    Insolvency Numbers:

    • Annual Data – In 2023, the UK recorded 25,158 corporate insolvencies, the highest number since 1993 and a 14% increase compared to 2022​.
    • Quarterly Data – In Q4 2023 alone, there were 6,788 insolvencies, 14% higher than in the same quarter of the previous year and the highest quarterly figure since Q4 2008.

     

    Types of Insolvencies:

    • Creditors’ Voluntary Liquidations (CVLs) – Accounted for 82% of all company insolvencies in 2023. CVLs reached their highest annual number since records began in 1960, totalling 20,577 cases.
    • Compulsory Liquidations – Increased by 44% to 2,827 cases compared to 2022.
    • Administrations: Rose by 27% to 1,567 cases.
    • Company Voluntary Arrangements (CVAs) – Increased by 67% but remained below pre-pandemic levels.

     

    Statistics from GOV.UK

     

    Sector-Specific Impact

      Sector-Specific Impact

      The rise in business insolvencies has not affected all sectors equally. While many industries struggled in 2023, some were hit particularly hard, reflecting the broader economic challenges of the year.

       

      Construction – With 4,276 insolvencies (18% of the total), construction remains the most affected sector. The sector’s exposure to rising material costs, supply chain disruptions, and labour shortages all contributed to the high insolvency rate.

       

      Wholesale & Retail Trade – 3,777 insolvencies were recorded (16% of the total). Due to ongoing economic shifts, retailers have faced challenges like changing consumer behaviour, high inflation, and reduced footfall​. (Will link in to covid blog)

       

      Accommodation & Food Services – 3,477 insolvencies (14% of the total). This sector struggled with reduced consumer spending, labour shortages, and pandemic-induced changes in dining habits​.

       

      Administrative & Support Services – There were 2,282 insolvencies (9% of the total). Companies in this sector were affected by changing work patterns and reduced demand for services like recruitment and facilities management​.

       

      Manufacturing – 1,911 insolvencies (8% of total). Rising energy costs, supply chain issues, and declining global demand led to significant financial challenges for manufacturers​.

       

      Statistics from GOV.UK

       

      Key Drivers of Insolvency 

        COVID-19 Legacy:

        The COVID-19 pandemic has left a lasting impact on the UK’s business environment, significantly contributing to the unprecedented rise in insolvencies in 2023. For more information on why COVID-19 continues to impact insolvency rates, take a look at our blog From Lockdown to Liquidations.

         

        Economic Climate:

        High inflation, rising operational costs, and reduced consumer spending have strained profit margins. The lagged effect of economic recovery means many businesses are still grappling with financial distress​.

         

        Creditor Pressure:

        Creditors became more assertive in pursuing outstanding debts as the economy showed signs of recovery. The end of government-imposed insolvency moratoriums and director fatigue made negotiations more challenging, leading many directors to opt for Creditors’ Voluntary Liquidation (CVL). Supply chain disruptions and reduced financial support have also left businesses vulnerable to creditor demands.

         

        Landlord and HMRC Impact:

        Businesses are facing substantial debts owed to landlords and HMRC. The lifting of the rent moratorium has led landlords to aggressively pursue rent arrears, pushing many companies into insolvency. Meanwhile, HMRC’s reinstated preferential status in insolvencies and the repayment phase of pandemic loans like the Bounce Back Loan Scheme have placed further financial strain on businesses, particularly those unable to secure Time to Pay arrangements.

         

        Wondering what 2024 will bring?  Take a look at our UK Business Insolvency Outlook for 2024 article.

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