According to the latest government statistics, the number of registered company insolvencies across the UK has decreased to 23,872, reflecting a reduction of 5% compared to 2023.

After some significant swings over the last five years – mainly as a result of the business disruption from Covid lockdowns and the impact of unravelling the government support schemes - the statistics for 2024 show a return to a more typical ‘normalised’ number of companies entering formal insolvency procedures.

In 2024, there were 23,872 registered company insolvencies compared to 25,163 in 2023 and 22,129 in 2022. These three post-Covid years follow the significant reduction in total company insolvencies in 2020 of 12,631 and 2021 of 14,058.

The increased numbers in 2022 and 2023 were driven by the number of small companies that survived because of government-backed Covid support schemes in 2020 – 2021 but were unable to do so once they came off that ‘life support’. This is reflected in the increased number of smaller businesses that were placed into liquidation in 2022 and 2023.

Head of Insolvency Operations at Leonard Curtis Carl Faulds comments: "While the return of a ‘normalised’ market is welcome there are still substantial risks ahead, particularly for medium-sized business because of the proposed increases in employers’ national insurance and the minimum wage from April this year."

"The sectors likely to be hit hardest are multi-site hospitality and retail organisations, where the rising employment costs follows on from other cost increases, including utilities and the wider effect of high inflation over the last three years."

"The government believes that the increases in employment costs can be offset by greater use of technology, but apart from larger supermarkets introducing self-checkouts, we have yet to see how this will be applied, particularly for the smaller operators in these two sectors."

Stephen Goderski, Partner at restructuring and insolvency firm PKF Littlejohn Advisory, notes that while a decline in insolvencies is welcome news, businesses are not out of the woods yet.

He states: “A reduction in insolvencies is encouraging, but the real challenge is what lies ahead. With national insurance contributions set to rise in April, businesses will see their payroll costs increase, putting further strain on cash flow at a time when many are already stretched. The question is whether the government’s economic strategy will provide the stability and support businesses and SMEs need or whether uncertainty will continue to dominate the landscape."

“Larger businesses and SMEs remain vulnerable in this environment. Although some relief is coming, businesses are still waiting for clear signs of sustainable growth and improved trading conditions."

"If uncertainty lingers, there is still a risk that insolvencies could rise again in the months ahead.”

Stephen emphasises the importance of maintaining this momentum by continuing to act swiftly when financial difficulties arise: “Proactive measures, such as seeking professional advice and reassessing financial strategies early and often can significantly enhance the chances of long-term viability."

"For small and medium-sized enterprises (SMEs), this approach is vital to ensure their role as the backbone of the UK economy remains strong.”