A significant month-on-month fall in the number of corporate insolvencies in England and Wales is an additional sign that economic conditions are starting to improve and revenues may increase this year.
This is according to the Midlands branch of the UK’s insolvency and restructuring trade body R3 and comes on the back of lower inflation, expected interest rate cuts and latest figures published by the Insolvency Service which show that corporate insolvencies decreased by 16.6% in March to a total of 1,815 compared to February’s total of 2,177.
The government figures also show a decrease of 17.2% against March 2023’s figure of 2,193, and a fall of 2.2% in comparison with March 2022’s total of 1,856.
R3 Midlands chair Stephen Rome, a partner at local law firm Penningtons Manches Cooper, said: “The biggest driver of the monthly and yearly fall in corporate insolvency numbers is a reduction in Creditors’ Voluntary Liquidations. However, it should be noted that numbers for this process and overall levels of corporate insolvency are still higher than they were pre-pandemic.
“High costs and constrained spending have continued to hit businesses hard in the first three months of 2024. But while the trading climate is a challenging one, there are signs that directors expect revenues to increase this year, suggesting the mood among much of the local business community is becoming more positive.
“It remains to be seen, however, whether inflation will fall quickly enough to benefit businesses, and whether the hoped-for increases in income will outstrip potential rises in costs and wages.
“Importantly, directors need to be alert to any indications of business distress and act on them promptly. Cashflow issues, increases in stock, and problems paying taxes or invoices are all signs to watch out for. The sooner these are acted upon and professional advice sought, the greater chance there is of the situation improving.”
