PwC comments on April's insolvency data

Carla Matthews, Head of Contentious Insolvency and Asset Recovery at PwC said:

“The number of insolvencies last month (1,685) was 15% lower than in the same month last year and down on the 2,457 seen in March. On the surface this looks encouraging and is likely due to increased business confidence and directors taking a more optimistic view of the economic outlook. Simultaneously, the Easter court break may have contributed to the reduction in compulsory liquidations.  

“However, we’re not out of the woods yet. The trading environment remains challenging for business, and while energy costs are starting to drop, both inflation and the cost of servicing debt remains stubbornly high, with commodity prices continuing to cause pressure across a range of sectors, so the outlook for the rest of the year may still be turbulent.
 

David Kelly, Head of Insolvency at PwC, added:

“While there has been a decrease in company insolvencies, there were 183 compulsory liquidations in April 2023, which is nearly twice the number in April 2022. As such, there has also been an increase in winding up petitions, with 409 filed in April - over double the number filed in the same month last year (186). It’s clear that In the current economic climate many creditors feel unable to accept an uncertain IOU and instead are having to pursue debts. 

“At the moment, the pain is mainly being felt by the smaller businesses, which are more vulnerable given their size. Our analysis shows approximately 99% of liquidations in the first quarter of this year have related to companies with annual turnover of less than £1m.”