LONDON – The number of companies filing for voluntary liquidations in England and Wales hit a record high in the second quarter of this year as businesses struggled without the support available to them during the COVID-19 pandemic, data showed on Tuesday.
Total company insolvencies surged by 81% compared with the April-June period last year, the bulk of them creditors’ voluntary liquidations (CVLs) which were the highest since records began in 1960, the government’s Insolvency Service said.
Total company insolvencies were 13% higher than in the January-March quarter.
Britain’s economy is struggling under the strain of nearly double-digit inflation which is expected to rise further when energy prices jump again later this year.
The combination of recession risks and high inflation poses a dilemma for the Bank of England. It is set to raise interest rates for the sixth time since December on Thursday, possibly by half a percentage point which would be its biggest hike since 1995.
“Companies will need ensure they adapt quickly in order to safeguard their long-term survival during what looks to be a tough autumn, where lower growth, tighter capital and market volatility are likely to be the norm,” Samantha Keen, a partner at consultancy firm EY-Parthenon, said.
The number of compulsory liquidations rose by 9% in the second quarter and was nearly four times higher than a year earlier but remained lower than levels seen before the pandemic.
(Reporting by Farouq Suleiman; Editing by William Schomberg)
