Company insolvencies in England and Wales soared 40% last month as businesses struggle with rising costs and energy bills due to rampant inflation.
Official figures from the Insolvency Service and Companies House show there were 1,691 insolvencies in June, an increase from 1,207 in June 2021, and up 15% from pre-COVID period in 2019.
Although June's insolvencies were lower than in May, 1,456 were creditors’ voluntary liquidations (CVLs). This is when a company makes the decision to be liquidated because it cannot pay its bills.
However, there were also 3.6 times as many compulsory liquidations last month as in June 2021, and the number of administrations was 2.3 times higher compared to 2021.
Rebecca Dacre, partner at Mazars, said: "Businesses are fighting a losing battle against rising costs – with the added worry of falling consumer spending.
"With energy prices rising, businesses are being forced to increase their prices despite consumers feeling the pinch. Many businesses that were already struggling are now facing a real crisis.
"Price pressures are becoming more embedded as interest rates rise and the economy contracts. Whilst easing slightly from the peak in March, the latest insolvency figures will still cast greater uncertainty over businesses that are already facing a grim outlook."
Recent analysis from British Chambers of Commerce (BCC) found as many as 65% of firms are expecting to raise prices in the next three months as soaring inflation continues to eat into margins and profits.
This was up from 62% in the first quarter of the year, a record high, and a 23 percentage point rise compared to a year ago. Only 1% of businesses overall expect a decrease in their prices, it said.
Meanwhile, data from the Office for National Statistics shows one in every four firms in the UK are planning to raise prices further.
It comes as UK inflation increased to 9.1% in May amid surging energy prices and is expected to have risen further in June when the latest readings are confirmed later this month.
Nearly a quarter of UK firms revealed a slump in trade over the past month amid cost of living pressures.
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