Britain faces its highest level of corporate insolvencies on record this year as businesses crumble under the pressure of higher interest rates.
Around 33,000 companies will go under this year, according to the Centre for Economics and Business Research (CEBR), many of which will never have recovered from the impact of the pandemic.
The consultancy increased its estimate for insolvencies from 28,000 as it warned the retail and hospitality sectors “have nearly caught up with construction in terms of insolvency numbers in 2023”.
It said the figures would be a new record since 2013, where comparable statistics are available, although it added that its own analysis suggests insolvencies would have been higher in the 1990s.
As well as the pandemic hit, companies are grappling with increased borrowing costs after the Bank of England raised interest rates to 5.25pc to bring down inflation, which surged after the Covid years.
Deputy chairman Douglas McWilliams said: “The companies going bust in 2024 and 2025 are largely ones that got into financial trouble in the Covid years and have never really escaped.”
He added: “Our model takes account of the outlook for the commercial property sector, which is currently in tougher straits than we thought previously and is likely to push harder for rent recovery.”
Rob Russell, partner, DLA Piper, said: “This is the tip of the iceberg with increased stress forecast in 2024.”
He added: “After a year of rising base rates and input costs, it is no surprise that this has precipitated a jump in corporate insolvency numbers.”
