Home Finance & Investments R3 responds to June 2022 insolvency statistics

R3 responds to June 2022 insolvency statistics

Eleanor Temple, chair of the insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds

Corporate insolvencies decreased by 7.2% in June 2022 to a total of 1,691 compared to May’s total of 1,822, but were still 40.1% higher compared to June 2021’s figure of 1,207.

Personal insolvencies decreased by 6.4% to 9,824 in June 2022 compared to 10,497 in May, and were 0.3% lower than June 2021’s figure of 9,852.

Eleanor Temple, chair of the insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to today’s publication of the June 2022 corporate and individual insolvency statistics for England and Wales:

“The monthly fall in corporate insolvencies has mainly been driven by a reduction in Creditors’ Voluntary Liquidations (CVLs), a procedure initiated by directors of insolvent firms to close their company. This fall in corporate insolvencies matches May’s unexpectedly positive GDP figures – however business owners should not be complacent given the ongoing economic pressures which will start to be felt in insolvency numbers in the next few months.

“Despite these positive statistics, inflation continues to have an impact on all aspects of business with input costs and overheads heading in the wrong direction. Not only are directors facing immediate strain to deal with this inflationary pressure, but they will also be looking at re-evaluating investment decisions and wider business strategies in the medium-term. This is likely to act as a further drag on the economy in the months ahead.

“At the same time, consumer confidence has hit its lowest point since the start of the pandemic, bringing down consumer spending, which could mean that sectors such as travel, retail and hospitality could particularly struggle as these are the things people usually cut first.
“Turning to the personal insolvencies, the monthly and yearly fall in numbers has been driven by a reduction in all forms of personal insolvency process.

“Despite this, times are still tough for people in England and Wales. We often talk about putting money away for a rainy day but with a rise in costs across the board from food to fuel and even rent, for many people that rainy day has arrived. And for some, it’s likely to appear soon.
“With wages struggling to keep up with inflation, a significant number of people simply have nothing left to spare from their pay packet once the bills have been paid. But we’re also seeing many people having to dip into their savings and use credit cards to pay for just the essentials, with some reducing their workplace pension contributions to provide some additional financial elbow room.

“While individuals across the board are feeling the effects of the rising cost of living, those on lower incomes are most severely affected and it is those people that are most vulnerable to becoming insolvent.

“Anyone who is concerned about their business or personal finances should seek professional advice as soon as possible. Talking about your money worries can be a challenging conversation to have, but seeking early advice gives you more potential options and more time to make a decision about what’s best for you.”