28 Oct 2022
Toby Banfield, Restructuring and Insolvency Partner at PwC, said:
“The number of insolvencies in Q3 2022 increased by 40% year-on-year compared to Q3 2021, as businesses weather increasingly challenging economic conditions. There were 5,595 company insolvencies in Q3 2022. Small businesses account for the overwhelming majority of these insolvencies. During 2022, there were only 104 insolvencies of businesses with turnover of more than £10m.
“The three industries that experienced the highest number of insolvencies in the 12 months ending Q3 2022 were Construction with 3,949 insolvencies, followed by Wholesale and retail trade; repair of motor vehicles and motorcycles (2,910), and Accommodation and food service activities (2,478).
“Within the engineering and construction sector, contractors typically work to tight margins with fixed price contracts. So, inflation across raw materials, energy costs and labour can quickly make contracts loss-making. With construction volumes for new projects starting to fall, this will continue to put pressure on the sector.
“Within retail, the fall in the value of the pound increases the costs of imports, especially those from Asia where shipping costs remain above historical levels. This, combined with a decline in consumer sentiment given the uncertainty in the economy, is a real challenge for retailers.”
“Looking forward, companies need to act now to preserve cash and get their forecasting in order. Working capital, the financial float which keeps businesses running before payment comes in for goods and services, needs to be carefully managed. Most importantly, businesses should engage early and proactively with their shareholders, lenders, landlords and suppliers when they need to support, allowing time for an agreement to be reached. There are lots of tools available to support businesses in the UK with appropriate advice.”
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- 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 151 countries with over 364,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
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