The number of companies choosing to go into liquidation in the Southwest is increasing as bosses see a grim future now that government support for Covid ends, according to a prominent insolvency expert.
Figures released by the Insolvency Service show a more than 60% increase in business bankruptcies nationwide compared to the same period last year.
Corporate bankruptcies overall decreased by 3% in October 2021 to a total of 1,405 from the total of 1,449 in September, but increased by 63.6% from the figure of 864 in October 2020.
Philip Winterborne, chairman of the R3 Southwest Insolvency and Restructuring Trade Body, said the monthly drop in business bankruptcies was due to a reduction in the number of voluntary liquidations of creditors.
But he pointed out that there were still twice as many companies entering this procedure than at the same time last year, and nearly 20% more than in 2019.
He said: “This would suggest that a significant number of business leaders are facing the difficult decision to shut down their businesses after judging medium to long-term post-pandemic survival unlikely.
“However, the fact that overall corporate insolvencies are 5% lower than the October 2019 count suggests that government support measures have prevented the economic consequences of Covid from translating into higher levels of corporate insolvency. .
“The business climate is still tough. Economic growth slows down, costs rise and consumer confidence decreases. And although consumer spending is higher than it was around this time last year, the growing number of Covid cases and sharp increases in energy prices have caused many companies to shut down. do not see the benefits.
“As we approach Christmas, we urge business leaders in the South West to be alert for signs of business distress, including cash flow issues, such as difficulty paying bills, staff, or other charges. general, and seek advice at the first sign of trouble.
Meanwhile, personal insolvencies have fallen by nearly 20% nationwide, but as the number of people entering a breathing space remains relatively constant, many people still seek help with their financial problems. .
Personal bankruptcies fell 3% to 9,668 in October 2021 from 9,966 in September 2021, and were 19.2% lower than the 11,960 figure in October 2020.
Mr Winterborne, who is a partner at Temple Bright Solicitors in Bristol, said: “Looking at the personal insolvency figures, the month-over-month declines were due to a reduction in all types of proceedings .
“The number of people entering a breathing space remains relatively constant, suggesting that there are still many people who face some level of financial hardship, which is not surprising given the impact of the pandemic.
Business Live’s Southwestern business reporter is William Telford. William has over a decade of experience reporting on the business scene in Plymouth and the South West. It is based in Plymouth but covers the entire region.
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“From a personal finance perspective, the situation continues to be difficult for people. Personal debt has increased, consumer confidence is low, and people are worried about their finances and the future of the economy. These concerns were further compounded by rising energy prices and rising costs across the board, while the 1.1 million people who were still supported by the leave scheme when it ended will be worried. for the future of their jobs. “
He added, “Anyone in the Southwest who is concerned or anxious about their business or personal finances should seek advice as soon as possible. Early counseling gives you more potential options and more time to make a decision on what’s best for you – and most insolvency professionals will give you a free hour to explain your situation and outline and discuss. your potential options.