The number of business failures increased by 19% in June compared to the previous month and by 63% compared to June last year, the latest government figures show.
The 1,207 company insolvencies in June was the highest monthly figure since the pandemic started and – according to the insolvency and restructuring trade body R3 – could represent the impact of the delay in lifting the final COVID restrictions.
Allan Cadman, North West chair of R3, says: “The increase in corporate insolvencies between May and June has been driven by a rise in Creditors’ Voluntary Liquidations (CVLs), a measure used by directors to voluntarily close down a company.
“The Government’s decision to delay lifting the final COVID restrictions for another month has clearly been a further blow to the business community and may have been particularly unhelpful for the hospitality and retail sectors, which have been hit hardest by trading restrictions and lockdowns.
“It may be that this impact has been reflected in these statistics as the rise in CVLs suggests that for many directors, the delay to the removal of the restrictions may have simply made it uneconomic to continue trading.”
However with government support measures coming to an end, Allan Cadman said he was pleased with the recent announcement by the Business Secretary Kwasi Kwarteng that HMRC would take a cautious approach to businesses struggling with post-pandemic debt.
He added: “The news that HMRC will take a supportive approach to rescue proposals from viable businesses is welcome, and we hope will support the profession’s efforts to support COVID-hit firms.
“Anyone who is concerned about their business finances should seek advice from a qualified source as soon as possible. Taking the initiative, rather than avoiding the issue, will mean you have more options open and more time to consider your next step.”