LONDON, April 28 (Reuters) - The number of companies
declared insolvent in England and Wales in the first three
months of 2023 was up 18% on a year earlier and remained close
to the 13-year high recorded in the final quarter of 2022,
government data showed on Friday.
Some 5,747 companies in England and Wales were declared
insolvent in the first quarter of this year compared with 5,969
in the final quarter of 2022, which was the highest number since
mid 2009, the seasonally adjusted figures showed.
"We're seeing an increasing domino effect of insolvencies
where firms fail and are unable to pay their debts, thus causing
the failure of other firms to whom they owe money," said David
Kelly, head of insolvency at accountancy firm PwC.
Surging energy costs last year put pressure on many British
smaller businesses, especially in hospitality, leisure and
retail as households have less money to spend on non-essentials.
Many firms were still carrying debts built up during
closures caused by lockdowns to tackle the COVID-19 pandemic.
Earlier this month, the International Monetary Fund forecast
that Britain's economy would shrink 0.3% this year, the biggest
fall it predicted for any major economy.
PwC said 98% of companies being liquidated had an annual
turnover of less than 1 million pounds ($1.25 million).
"While the scale of these businesses is relatively small,
they are an important part of the UK corporate ecosystem," Kelly
said, adding that there were signs trouble was now beginning to
spread to larger, more resilient firms.
Looking just at the most common type of insolvency,
creditors' voluntary liquidation, the number of companies going
bust over the past four quarters was the highest since the
series began in 1960, the government agency that released the
data said.
Compulsory liquidations, which require a court order, have
almost doubled over the past year but were still slightly lower
than before the start of the pandemic.
Measured as a proportion of companies actively trading,
total insolvencies were the highest since 2014 at 0.508%.
Friday's data do not cover Scotland or Northern Ireland,
which have separate bankruptcy processes to the rest of the
United Kingdom.
($1 = 0.8029 pounds)
(Reporting by David Milliken
Editing by Frances Kerry)
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