The Insolvency Service has released the latest figures for UK insolvencies in May 2024.
In May 2024, the number of registered company insolvencies in England and Wales decreased to 2,006, showing a 6% drop from April 2024 (2,144) and a 21% decrease compared to May 2023 (2,547, the highest monthly number since October 2008).
Efforts to reduce the number of company insolvencies have yet to match the levels seen during the COVID-19 pandemic and between 2014 and 2019.
Throughout 2021 and 2022, there was a steady increase in the number of businesses facing insolvency. The trend continued in 2023, which marked the highest annual number of company insolvencies since 1993.
According to experts, the recent decrease reflects a positive shift in trading conditions compared to the slight recession experienced at the end of last year in the UK.
Of the 2,066 registered company insolvencies in May 2024:
Numbers of CVLs and administrations were lower than in both May 2023 and April 2024, while the number of compulsory liquidations was lower than in May 2023, but higher than in April 2024.
One in 180 companies on the Companies House effective register entered insolvency between 1 June 2023 and 31 May 2024. This increased from the 54.2% per 10,000 companies that entered insolvency in the 12 months ending 31 May 2023.
Figure 1: Company insolvencies by type, England and Wales, May 2019 to May 2024:
Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures).
In May 2024, Company Voluntary Liquidations (CVLs) comprised 79% of all company insolvencies, indicating a significant proportion. The number of CVLs decreased by 5% from April 2024, showing a positive trend. Additionally, it was 26% lower compared to the same month last year (May 2023). It had marked a record-high monthly number of CVLs in the time series dating back to 2000, indicating an improvement after adjusting for seasonal variations.
Despite the difficult times, 2023 marked a positive milestone with the highest annual number of CVLs since 1960, which reflects a consistent upward trend in CVL numbers since 2021. Notably, there was a yearly increase of approximately 10% from 2017 to 2019, despite the setback during the COVID-19 pandemic, when CVLs dropped to their lowest levels since 2007.
In May 2024, the number of seasonally adjusted compulsory liquidations was 10% lower than in April 2024 but 27% higher than in May 2023. In 2023, compulsory liquidations increased by 44% from 2022 but remained 4% lower than in 2019 (pre-pandemic levels).
After seasonal adjustment, the number of administrations in May 2024 was 13% lower than in April 2024 and 20% lower than in May 2023.
The number of administrations increased during 2022 and 2023 from an 18-year annual low number seen during the COVID-19 pandemic in 2021. Current levels are similar to those seen between 2015 and 2019.
CVAs were 37% lower in May 2024 than in May 2023 but 6% higher than in April 2024. Numbers remain low compared to historical levels.
2023 witnessed a dramatic surge in the number of CVAs, which was 68% higher than in 2022. This was a significant shift, considering that 2022 had the lowest-ever annual total in the time series, dating back to 1993. However, the number in 2023, while showing a substantial increase, remained approximately half of the levels seen from 2015 to 2019.
The five industries that experienced the highest number of insolvencies in the 12 months to April 2024 were:
Figure 2: Company insolvency by industry, England and Wales, May 2023 to April 2024 compared with May 2022 to April 2023.
For over 20 years, CoCredo has provided online business credit reports, UK and International business credit monitoring, company credit score information, and financial data to businesses and suppliers in the UK and internationally.
Dan Hancocks, CoCredo MD, says: “We are experiencing an increase in business activity compared to last year, with critical indicators demonstrating enhanced consumer and business confidence. While we may not be entirely out of the woods, compared to twelve months ago when businesses were grappling with unpredictable cost inflation and energy bills, there is now much more certainty for companies to plan."
"Economic growth has experienced a temporary halt after a positive couple of months. Many investment decisions are currently on hold as we await predicted interest rate cuts and the outcome of the General Election – a particular risk in sectors like construction which could stall planning decisions.”
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