Britain to see 7,000 insolvencies per quarter in 2024

The research, conducted by thinktank the Centre for Economics and Business Research (Cebr), is also predicting a recession in the UK, with two consecutive quarters of contraction in GDP in the final quarter of 2023 and in the first quarter of 2024.  

It follows what has been a significant quarter of business insolvencies, with more than 6,700 taking place in the second quarter of 2023 – double what was seen in a typical quarter during the pandemic and 50% higher when compared to same quarter in 2019. For comparison, the number of quarterly insolvencies averaged 4,100 between 2015 and 2019.  

This is also the highest quarterly peak since 2009. A major factor in this, according to Cebr, has been due to the number of firms who took on debt during the pandemic to survive such as retail and hospitality as – while these businesses saw a post-Covid boom in demand – many are likely to be repaying back these loans.  

Such businesses paying back loans will be struggling amid the high interest rate environment, with bank rates going from 0.1% in December 2021 to its current level of 5.25%. These higher borrowing charges add to the costs faced by businesses already paying loans, and also deter investment in new projects and equipment.   

Additionally, companies face weaker demand from the cost-of-living crisis, meaning that – while UK the economy has shown a lot of resilience to the impacts of the high rates of inflation seen in 2022 and 2023 – growth in GDP remains very weak, with 0.2% growth in the second quarter of 2023.