The United Kingdom is facing a crisis as the corporate business insolvency rate is rising. The weak economic grip, along with rising interest rates and a surge in energy bills, all the reasons combined, is making businesses choose their way out. Firms in the United Kingdom are going bust, attributing to various reasons, including inflation and the rising cost of borrowing. The figures released by the government’s Insolvency Service reveal that Wales and England saw a 16% rise in the insolvency rate in March as compared to the previous year.
The Insolvency Service stated that the number of filings, according to the recent data, is the highest since the agency started publishing data in early 2019. According to the latest figures, the reported number of filings is 2,457, showing a jump of 55% in the declaration since the pandemic hit in March 2019.
Also Read: WPI Inflation Rate Dropped 29-Month Low Of 1.34% In March.
Businesses are facing this pressure to opt for insolvency due to rising borrowing costs. The Bank of England rose its benchmark interest rate to 4.25 due to the rising pressure from the labour market. Along with the rising borrowing cost, firms are also facing problems due to the rising energy costs and the general stagnation of the British economy. Not only corporate business but individual insolvency has also seen a spike. Individual insolvency rose by 2%, and debt relief orders rose by 35%.
The head of the insolvency at PwC, David Kelly, said:
“Company insolvencies will likely continue to rise in the short term, making for a challenging spring,” he added: “Businesses are struggling to secure financing and pay off their loans due to high-interest rates, and the wider impact inflation and consumer sentiment are having on sales and cash flows.”
So a multitude of reasons combined have led to a rise in the insolvency rates; now it’s time for the government to step in and take corrective measures to resolve the same!
