Business insolvencies shot up by 40 per cent year-on-year in May, as macroeconomic pressures mount up.

2,552 businesses collapsed in May, according to the Office for National Statistics’ (ONS) data, which was higher than levels seen while Covid support measures were in place, and also higher than pre-pandemic numbers.

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‘’The jump in the number of insolvencies comes at a time when problems are piling up for businesses,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“Even though the UK appears to be swerving a recession for now, the triple whammy of the rapid hike in borrowing costs, a super-tight labour market and onerous energy bills has been too much to bear for many firms.

“Spying little light at the end of the tunnel, with interest rates expected to keep rising, they are shutting up shop in greater numbers, as their debts have mounted up.

“During the pandemic, as the country went into panic mode, there was greater help available for firms, such as loans and relief measures aimed at ring-fencing businesses from aggressive creditor enforcement, which kept insolvency numbers lower. But now, as firms are still battling through an inflationary crisis, insolvencies have surged higher than pre-pandemic times.”

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The ONS data also showed that there were 189 compulsory liquidations last month, a 34 per cent year-on-year increase.

“Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus pandemic, partly as a result of an increase in winding-up petitions presented by HMRC,” the ONS said.

And last month, there were 2,181 Creditors’ Voluntary Liquidations (CVLs), 38 per cent higher than in May 2022. Numbers of administrations and Company Voluntary Arrangements (CVAs) were also higher than in May 2022.

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