Comments on today’s Insolvency Service Q4 2022 company insolvency statistics
“The 30% year-on-year increase in company insolvencies in Q4 2022 illustrates the challenging trading conditions currently facing many UK businesses. We are now starting to see a significant rise in the number of compulsory liquidations, which rose to 720 in Q4 2022, more than four-times higher than the same period in 2021.
“Supply chain pressures, rising inflation and high energy prices have created a ‘trilemma’ of headwinds which many management teams will be experiencing simultaneously for the first time. This stress is now deepening and spreading to all sectors of the economy as falling confidence affects investment decisions, contract renewals and access to credit.
“EY-Parthenon’s latest Profit Warnings report, released yesterday, found the number of warnings from UK-listed companies increased 50% year-on-year, with record levels of warnings citing rising costs.
“Weaker consumer confidence, which affected many businesses in the lead up to traditionally the busiest time of the year for consumer-facing companies, also accounted for 20% of warnings in Q4 2022.
“It’s vital that businesses develop operational and financial resilience to face the year ahead which is likely to be characterised by lower growth, tighter capital and market volatility. The latest analysis from the EY ITEM Club Winter Forecast warns the recession is likely to be deeper than previously expected. Robust forecasting and scenario planning will ensure management teams are fully equipped to adapt to conditions in their market, safeguarding their long-term survival.”
Samantha Keen, UK Turnaround and Restructuring Strategy Partner at EY-Parthenon and President of the Insolvency Practitioners Association (IPA)