There was a significant increase in the number of firms that became insolvent in July when compare with the corresponding month last year, the latest figures show.

According to the Insolvency Service, 2,191 businesses went bust in England and Wales last month, up 16% on the 1,890 recorded in July 2023.

The figures included 320 compulsory liquidations which is the highest monthly number since before the Covid-19 pandemic.

The rise reflected “months of high interest rates, weak demand and rising costs continuing to feed through”, according to David Hudson, restructuring advisory partner at FRP.

He said: “We expect insolvency levels to remain elevated for some time yet.

“While economic conditions are improving, there are many businesses that have had their resilience ground down since the onset of the pandemic and that are now carrying large amounts of debt, which they’ll struggle to maintain even with falling rates and strengthening consumer confidence.”

Meanwhile, there were 25,551 insolvencies in the 12 months to July 2024, more than at the height of the 2008 financial crisis.

But the Insolvency Service cautioned that part of the reason for the rise in recorded insolvencies since the financial crisis was because there were more companies registered on Companies House.

Back then, the rate of insolvencies per 10,000 companies was 113.1 at its peak. In the year to July 2024 it was 56.6 per 10,000.

The Insolvency Service only records figures for England and Wales, but Scotland also saw a 21% rise yearon-year to 117 insolvencies, according to the Accountant in Bankruptcy, its equivalent government agency.

In Northern Ireland, insolvencies were up 53% compared with last year, but the percentage rise is less reliable because of the small number of companies – some 20 went bust over the course of the month.

Separately, the Insolvency Service said 10,524 individuals entered insolvency in England & Wales in July 2024.

This was similar to the numbers seen in June 2024 and 24% higher than in July 2023.

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