PwC is warning of a high number of insolvencies in Q4 2023 on the back of data for Q3.
“Insolvency Service data shows there were 6,208 company insolvencies in Q3 2023. Our analysis shows there was a 10% increase in insolvencies in Q3 2023 compared to the same quarter last year, with the number of insolvencies at levels not seen since the financial crisis in 2009,” said David Kelly, head of insolvency at PwC.
“Smaller businesses continue to be most affected by insolvency - in Q3, 99% of all creditors’ voluntary liquidations (CVLs) came from companies with less than £1m turnover, with 98% of compulsory liquidations also from this part of the corporate market. While larger companies are not immune to the current pressures, we expect smaller businesses to continue to be the most adversely affected in Q4 and throughout 2024.
“Interestingly, there has been approximately a 35% increase in compulsory liquidations in Q3 2023 compared to Q3 2022, and they now make up over 12% of insolvencies compared to 9% last year. This demonstrates the tougher stance creditors are taking and reflects a more challenging market.”
Sara Stoker, director in PwC’s restructuring and insolvency practice added: “The top four most impacted sectors in Q3 2023 were business services, construction, hospitality and retail. Our analysis shows there was a 26% increase in insolvencies in the hospitality and leisure sector (1,165 in Q3 2023 vs 921 in Q3 2022).
“Although the upcoming festive season may provide some welcome respite to this sector, the combination of staff and stock costs, supply chain demands, as well as high rents and interest rates, will make for a challenging final quarter. Overall, therefore, we do not expect the picture to change dramatically in Q4, with a high number of insolvencies unfortunately likely.”