PwC comments on November's insolvency statistics

David Kelly, Head of Insolvency at PwC said:

“Although the persistently high number of insolvencies is unfortunately no surprise, it is concerning that in the first eleven months of this year we have already exceeded the total number of insolvencies in 2022, with the outlook for next year looking precarious for many highly geared companies. 

“The hospitality and retail sectors have struggled this year as consumers have tightened their belts. So far, 17% of all insolvencies have come from the hospitality sector and 14% have come from the retail sector. Although Christmas normally provides a significant boost to these sectors, any respite is likely to be more muted as consumers continue to cut back. However, we expect construction and business services to remain the hardest hit in 2024, with almost a fifth (19% respectively) of all insolvencies so far coming from each of these sectors.

“Despite the recent easing in the rate of inflation, tighter credit conditions, lack of access to working capital, and high interest rates are still making conditions difficult to navigate for businesses, especially those at the smaller end of the market, with 98% of all insolvencies in November being for companies with less than £1m turnover. 

“However, this climate - especially the high interest rates - means we are also starting to see the fall of more zombie companies, which were sustained during the pandemic and have barely been surviving since. We expect a significant uptick in the number of zombie companies facing the prospect of insolvency next year as liquidity pressures become insurmountable.”