The number of companies that went bust last year in England and Wales hit a 30-year high, according to the latest figures.
More than 25,000 company insolvencies were registered in 2023, the highest number since 1993, as firms struggled with rising costs and interest rates.
Companies faced higher energy bills, while consumer spending was squeezed by the cost of living crisis.
The new figures show one in 186 active firms went bust in 2023.
Scotland and Northern Ireland recorded the highest numbers of company insolvencies last year since 2012 and 2019 respectively, although the nations have different bankruptcy laws to England and Wales.
Julie Palmer, partner at insolvency specialist Begbies Traynor, said thousands of businesses had gone bust because of a “perfect storm for financial distress”.
This included “interest rates at levels we haven’t seen in over a decade, pushing the cost of borrowing up, alongside inflation, weak consumer confidence and rising input costs”.
Figures from the Insolvency Service showed the number of companies in England and Wales closing voluntarily – through creditors’ voluntary liquidations or CVLs – rose 9% from 2022 to 20,577, which was the highest number since records began in 1960.
Companies forced to close, known as compulsory liquidations, jumped by 44% to 2,827
Although the number of firms going bust hit a 30-year high in 2023, the volume of companies registered in the UK has increased over time, so the rate of insolvencies last year was still is much lower than the peak rate of 94.8 insolvencies per 10,000 active companies during the 2008-09 recession.
The High Street’s most high-profile victim last year was retailer Wilko. Its collapse led to the loss of more than 12,000 jobs.
Experts say this year could be another difficult year for UK businesses too.
“There are concerns among businesses that the challenging external conditions will persist throughout 2024, and dampen prospects of a decrease in insolvencies,” said Jane Steer, partner in PwC’s restructuring team.
Many businesses will hope that the Bank of England will cut interest rates this year, with inflation falling.
But the retail and hospitality industries are likely to be heavily affected by an incoming increase in the national living wage.
Construction firms are suffering too with a dip in the housing market from higher interest rates.
Earlier this week, auditing firm Mazars said the construction sector was in an “immensely difficult period”, with more than 4,000 building firms going bust last year.
Closures were up 7% from the previous year, it said, as companies faced spiralling costs for materials, labour and borrowing.
Mazars also said construction had seen a higher number of bankruptcies than any other sector over the past three years.