14.53 BST Nils Pratley: It will be surprising if NatWest’s Howard Davies hasn’t gone by ChristmasĬan Howard Davies cling onto the top job on the NatWest board until 2024? However, with the start of the summer holidays and energy prices falling, we hope to see the sector begin to recover as the year progresses.” The hospitality and leisure sector made up 17% of insolvencies in H1 2023, and increased by 38% compared to H1 2022. “Consumer sentiment also remains a concern, particularly in the retail, food service and leisure industries, whilst the construction sector is grappling with credit risk brought about by inflationary pressure, labour shortages and increasing interest rates. A lot of this increase can be attributed to HMRC returning to pre-pandemic levels of enforcement action. This is driven by an increase in winding up petitions - formal applications from creditors to shut down companies - which our data shows have more than doubled to 2,400 in the first half of this year compared to the same period last year. “The high number of compulsory liquidations in Q2 of this year is striking - 637 compared to 382 in the same quarter last year. At 56 this was a 47% increase on the preceding quarter and a 75% increase on Q2 2022.Īnd here’s Lucy Fulmer, Director and Head of Creditor Markets at PwC: This is the highest number since the beginning of the pandemic. Administrations (at 409) were a 30% increase on the preceding quarter (when there were 314) and a 34% increase on Q2 2022. However, troubled companies with continuing business also seems to have been affected. However, the increased costs of administrations, where additional regulation, aimed at protecting creditors by requiring more extensive reporting and consultation- may also have had the unintended consequence of putting these procedures beyond the reach of many businesses. The increase in CVLs may reflect that many business have been ground down by a series of economic challenges which have hit in waves and eroded their businesses, leaving their owners with nothing to save - the pandemic, Brexit, labour shortages, the economic effects of the Ukraine conflict (leading to increased food and food costs) and now, rising interest rates. Jeremy Whiteson, restructuring and insolvency partner at Fladgate, says: “The current low-growth, high-inflation and relatively high interest rate environment has meant many businesses have faced building pressure over the last 12 months which is now translating into distress. “Although company insolvencies have been steadily increasing over the last 18 months, largely driven by Creditors’ Voluntary Liquidations (CVLs), in Q2 there was a significant uplift in the number of compulsory liquidations which rose 67% year-on-year. “Quarterly company insolvencies reached over 6,300 for the first time since 2009 in Q2 as many businesses struggled to contend with a sustained mix of pressures. Samantha Keen, UK Turnaround and Restructuring Strategy Partner at EY-Parthenon, says: Here’s some reaction to the jump in company insolvencies in England and Wales in the last quarter, to the highest in 14 yers. 15.00 BST Rising insolvencies: What the experts say
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