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Opus comments on record business failures

As the Insolvency Service publishes its corporate insolvency figures for December 2023 (, it becomes clear that 2023 recorded an all-time high for business failures.  We ask Nick Hood, Senior Business Adviser at the Opus Business Advisory Group ( ) what lies behind these worrying statistics.

“UK businesses have been battered by successive economic shocks, starting with the pandemic in 2020, followed almost immediately by the economic ripple effect of the Ukraine war and then topped by a full-blown cost of living crisis coming at the same time as a rapid escalation in interest rates.”

“Every part of their finances has been affected.  They have been hit by consumers reining in their spending, lower profits margins because of input cost inflation, higher overheads especially from soaring staffing costs, a tight labour market denying them the workforce they need and sharply higher interest costs on their borrowings.  Especially for more vulnerable smaller businesses, this means insoluble cash flow challenges, a lack of profitability and ultimately, an unviable company.”

“The strain shows clearly in the insolvency numbers.  Overall, there were 26,595 company insolvencies in 2023, just beating the previous record of 26,556 in 2009 at the height of the global financial crisis and up 14% on 2022 and 43% on pre-pandemic in 2019.  But the key figure is that Creditor’s Voluntary Liquidations (CVLs) were 81% of the total, compared to only 57% in 2009.”

“A CVL is the exit route for businesses too badly damaged to be rescued or with no future, where Directors take control and call a halt before creditor enforcement action overwhelms them.  It’s a potent illustration of the toll the economic shocks have taken on the financial fabric of UK businesses and on the morale of their owners.”

“Equally disappointing is the sharp fall in business rescues through the Administration route.  There were only 1,633 Administrations last year, compared to 4,167 back in 2009.  The reasons appear to be low growth prospects for the economy, allied to the continuing global economic uncertainty deterring business rescuers.  A tighter market for rescue funding may also be a factor.”

“It’s difficult to see that 2024 will be any better.  The trade credit insurance specialists, Atradius, is predicting a lower rise in business failures, but still an increase of 5%, which would push the total to another record of 28,000.”

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