Company insolvencies are highest since 2009 as energy crisis hits

The Office for National statistics said that between April and June this year a total of 5,629 businesses failed

Man in complete darkness holding a candle to investigate a home fuse box during a power outage (stock iamge) (Getty Images/iStockphoto)

The number of company insolvencies in England and Wales has hit its highest level in 13 years, according to official figures.

The Office for National statistics said that between April and June this year a total of 5,629 businesses failed.

This is the highest level recorded since the period between July and September in 2009, but still below the 6,943 firms that went under between October to December in 2008 at the height of the financial crash.

The number of insolvencies fell in 2020 after the government enacted support packages to help businesses survive the Covid pandemic, but have risen again since 2021, the ONS said.

The main concern reported by businesses during this period was energy price rises (22 per cent), which is an increase from 15 per cent in late February 2022.

The latest data showed that more than 1 in 10 UK businesses reported a moderate-to-severe risk of insolvency in August.

Construction, manufacturing, accommodation, food service, and retail accounted for more than half of the total insolvencies, the ONS reported.

Businesses have been struggling with spiralling costs and supply chain disruption caused by the pandemic. Some sectors, such as hospitality, have struggled to hire and retain staff.

As the ONS data makes clear, one of the most pressing concerns for UK firms is the high cost of energy which has been caused by Russia’s invasion of Ukraine in February this year.

This has led to eye-watering increases in gas and electric bills that businesses do not want to pass onto consumers via price rises as this could potentially lose them customers.

Prime minister Liz Truss has stepped in to try and quell fears that more businesses could go under due to the rapidly rising price of gas and electric by capping bills for six months.

Last month Germany reported a 26 per cent annual rise in insolvencies in August, and said it would temporarily relax requirements for companies to demonstrate that they were viable in order to keep more businesses afloat, Reuters reported.