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More normalised picture on UK insolvencies, but challenges remain

Restructuring and Insolvency
22
January
2025
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Head of Insolvency Operations at Leonard Curtis Carl Faulds comments on the latest UK insolvency stats and the story of 2024

The Government, through its Insolvency Service, has released the latest report on companies entering insolvency procedures for 2024.

After some significant swings over the last five years – mainly as a result of the business disruption from Covid lockdowns and the impact of unravelling the government support schemes - the statistics for 2024 show a return to a more typical ‘normalised’ number of companies entering formal insolvency procedures.

In 2024, there were 23,872 registered company insolvencies compared to 25,163 in 2023 and 22,129 in 2022. These three post-Covid years follow the significant reduction in total company insolvencies in 2020 of 12,631 and 2021 of 14,058.

The increased numbers in 2022 and 2023 were driven by the number of small companies that survived because of government-backed Covid support schemes in 2020 – 2021 but were unable to do so once they came off that ‘life support’.

This is reflected in the increased number of smaller businesses that were placed into liquidation in 2022 and 2023.

While the return of a ‘normalised’ market is welcome there are still substantial risks ahead, particularly for medium-sized business because of the proposed increases in employers’ national insurance and the minimum wage from April this year.  

The sectors likely to be hit hardest are multi-site hospitality and retail organisations, where the rising employment costs follows on from other cost increases, including utilities and the wider effect of high inflation over the last three years.    

The government believes that the increases in employment costs can be offset by greater use of technology, but apart from larger supermarkets introducing self-checkouts, we have yet to see how this will be applied, particularly for the smaller operators in these two sectors.

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