Figures released today by the Insolvency Service show that higher insolvencies in the 12 months ending Q3 2023 have been driven by increases in consumer-facing industries such as leisure, hospitality and retail.
In the 12 months to Q3 2023, insolvencies in the accommodation and food services industry were up 48 per cent and jumped 52 per cent in wholesale and retail in the same period.
The British Independent Retailers Association (BIRA), which works with over 6,000 independent businesses of all sizes across the UK, said it was “saddened” to see the latest insolvency figures showing worst year since 2009 with insolvencies up 10 per cent from a year ago in the three months to the end of September.
Statistics for July to September 2023 show that there were 6208 registered company insolvencies. comprising 4,965 creditors’ voluntary liquidations (CVLs), 735 compulsory liquidations, 466 administrations, 41 company voluntary arrangements (CVAs) and one receivership appointment.
After seasonal adjustment, the number of company insolvencies in Q3 2023 was 2% lower than in Q2 2023, but 10% higher than in Q3 2022. The last two quarters saw the highest quarterly insolvency numbers since Q2 2009 and the highest numbers of CVLs since the start of the series in 1960.
“This news is very worrying. Our members are telling us all the time how difficult it is on the high street,” said Andrew Goodacre, CEO of Bira.
“Comments that are coming through to us and I’m hearing all the time from our indie retailers are that its ‘tougher than Covid’ and that they are feeling ‘worn out’. Indie retailers are resilient and will keep going but they need some support, something to help them through this difficult period.
“It is why we are calling on the Chancellor to use his Autumn statement to retain the retail discount on business rates at 75 per cent. Any increases in this tax burden will push more businesses into closure and there will be many more empty units on the high streets throughout the UK. We have submitted this proposal to the Treasury, along with other ideas such as increasing the employer’s national insurance allowance and reducing corporation tax to help the smaller retailers,” he added.
Robyn Duffy, senior analyst for consumer markets at leading audit, tax and consulting firm RSM UK, said:
“‘”The retail, leisure and hospitality industries will have experienced one of their toughest trading environments to date over the last year. Post-lockdown hopes for a rebound were high, with the anticipation that pent up demand would be unleashed. But high inflation sucked that demand out of the market and caused an increase in input costs across every area of the business, from raw materials to utility and fuels bills. These industries have also struggled to bring staff back into the workforce, which has led to significant wage rises in a bid to keep up with competitors and secure talent. As a result, we’ve seen the dial on insolvencies move significantly in the past 12 months.
“In the retail sector, many businesses have made significant efforts to drive down excess stock throughout 2023, which will have helped ease pressures on balance sheets. This, coupled with the easing of input costs certainly paints a rosier picture on the supply side for these businesses.”