PwC comments on December's ONS insolvency data

David Kelly, Head of Insolvency at PwC said:

“Although lower than previous months, the high number of insolvencies in December rounds up an extremely challenging year for business. There were just over 3,000 more insolvencies in 2023 compared to 2022, an increase of almost 14%, with approximately 98% of insolvencies being for companies with less than £1m annual turnover - demonstrating just how difficult the climate has been, especially for small businesses. 

“Year on year, our analysis shows the retail and hospitality/leisure sectors have seen an 18% and 27.5% increase in insolvencies respectively - the hardest hit sectors alongside construction and business services. 

“While the aforementioned sectors are likely to continue to be the most affected, the tech sector is also coming under increasing pressure. In 2023 we saw there was an 8.4% increase in insolvencies in this particular sector. This may be due to the nature of the sector in being asset light and more reliant on funding - a difficult combination in an environment of higher interest rates and decreased risk appetite from lenders.

“Unfortunately, the picture for 2024 looks uncertain. Concerns remain around a sustained period of high interest rates, the impact the Gulf crisis is having on global shipping, supply lines and energy costs and the extent to which it will have a knock-on effect on inflation targets. The relief businesses hoped might arrive within the first half of this year may now be delayed in coming.”