UK Company Insolvencies Hit Highest Level Since 2009 Financial Crisis Amid Rising Interest Rates and Cost-of-Living Crisis

Over 18,000 firms became insolvent within the first nine months of 2023 and almost 38,000 more are in financial distress, with the construction and real estate sectors hardest hit due to higher borrowing costs and decreasing consumer spending.

• Over the first nine months of 2023, more than 18,000 businesses in the UK entered insolvency, the highest level since the 2009 financial crisis according to the Insolvency Service. This figure is 13% higher than the same period in 2022.
• The number of firms in 'critical financial distress', often a precursor to insolvency, rose by 25% in the last three months. Nearly 38,000 companies are in this precarious financial situation, with many in the construction and real estate sectors which are particularly sensitive to rising borrowing costs.
• Firms, many of which survived the pandemic thanks to government support and low interest rates, are now facing a financial reality check with higher interest rates affecting their working capital.
• The construction sector saw a 46% increase in firms facing critical distress in the past three months. Higher borrowing and material costs, coupled with decreasing consumer spending due to rising cost of living, mean many are holding off on home renovations.
• Inflation and interest rates have risen as government support, such as furlough and bounce back loans, have fallen away. This is putting added financial pressure on both businesses and consumers, exacerbating the existing cost-of-living crisis.

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