Bankruptcies in England and Wales Hit 13-Month High Amid Rising Interest Rates

Staff Report: The number of bankruptcy declarations in England and Wales hit a 13-month high last month, driven by rising interest rates that strained company budgets, according to a report by the UK’s Insolvency Service released on Friday.

The report revealed that 2,361 companies went out of business last month, a 17% increase compared to the same month last year. This was the highest number since May 2023 and tied for the third-highest on record since 2000.https://www.rt.com/business/601356-uk-bankruptcy-surge/

The construction industry was the most affected, with 1,700 companies declaring bankruptcy between January and May 2024, following a downturn in the housing market.

The retail and wholesale trade sectors, along with accommodation and food services including restaurants and bars, were also significantly impacted by reduced consumer demand, with around 3,000 companies filing for bankruptcy during the reported period.

“High borrowing costs and wage growth continue to be major concerns for business owners,” said Mark Supperstone, managing partner at ReSolve, a business advisory and restructuring firm, in an interview with Bloomberg.
Interest rates, at levels not seen in the UK for over a decade, are increasing borrowing costs. Coupled with high inflation, weak consumer confidence, and rising operating costs, these factors are severely affecting company balance sheets.

“A drop in interest rates is unlikely until later this year, although there is still hope for a reduction in August,” Supperstone added.

Business insolvencies in the UK have been rising since the removal of COVID-19 support measures by the British government, and they are now significantly above pre-pandemic levels, according to the report.