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Insolvencies could continue to rise after Christmas, says R3's regional chair

22 November 2023
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Lee believes that if the Christmas trading period doesn’t bring a wave of new income for many businesses, insolvencies could continue to rise in the new year - picture contributed
Lee believes that if the Christmas trading period doesn’t bring a wave of new income for many businesses, insolvencies could continue to rise in the new year - picture contributed

Businesses are being "battered from all sides", said Garry Lee, the chair of R3's Southern and Thames Valley region, following the publication of last month's personal and corporate insolvency statistics for England and Wales.

Figures from the Insolvency Service showed that corporate insolvencies increased by 17.6% in October this year to 2,315 compared to September's 1,969. They were also up 18.5% compared to October, 2022.

In addition, personal insolvencies increased by 35.7% in October compared to September this year but decreased by 6.1% compared to October 2022's figure.

READ MORE: No time for complacency says UK insolvency and restructuring trade body R3

R3 is the trade association for the UK’s insolvency, restructuring, advisory, and turnaround professionals. Its Southern and Thames Valley region includes Buckinghamshire, Oxfordshire, Hampshire, the Isle of Wight and Berkshire.

"Firms have been battling economic issues for three and a half years now, and corporate insolvency numbers are rising as more and more directors run out of options," said Lee.

"The figures published today show that Creditors’ Voluntary Liquidations and Administrations are at the highest levels we’ve seen in October in more than four years, and this reflects the tough trading climate and the level of director fatigue among the business community in England and Wales.

"Businesses are being battered from all sides. Costs have increased, demands for wages are incoming and people are spending less as they look to save ahead of the winter and to make sure they have enough left to cover the basics," he said.

Lee added that if the Christmas trading period did not bring a wave of new income, insolvencies could continue to rise in the new year.

"In these kinds of circumstances, it’s critical that directors are alert to the signs of financial distress, and act if any of them present themselves.

"Cashflow problems, stock piling up and issues paying rent, taxes or suppliers are all signs that a business is distressed and need to be acted upon before they get any worse - and while the business has as wide a range of potential solutions open to it as possible," he said.

Lee is an associate director in the recovery and restructuring services department at professional services group Evelyn Partners' Southampton office.

"Despite the fact that personal insolvencies are below pre-pandemic levels, household finances remain tightly squeezed. Although food inflation has fallen, prices remain higher than they were a year ago, and this, coupled with the costs of fuel and energy are a major worry for individuals and a strain on personal finances," he added.

"These issues, coupled with concerns about the economy, and rising prices mean people are cutting their spending back to the bone and looking for any opportunities to save money.

"This is likely to increase as winter sets in, as people save for Christmas and to make sure they can cover their heating and food costs."

Visit Hampshire Biz News for bright, upbeat and positive business news from the county


Giles Gwinnett is a writer at The Business Magazine. He has been a journalist for more than 20 years and covered a vast array of topics at a range of media settings - in print and online. After his NCTJ newspaper training, he became a reporter in Hampshire before moving to a news agency in Gloucestershire. In recent years, he has been covering the financial markets along with company news for an investor-focused web portal. His many interests include politics, energy and the environment. He lives in Dorset.

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