The number of company insolvencies has reached the highest level on record since 2014, new figures have revealed.
The statistics have been published as part of the Insolvency Service’s second quarter (Q2) report.
In total, the number of underlying company insolvencies between April and June 2019 increased by 2.6 per cent compared to the previous quarter, to 4,321.
This represents an 11.9 per cent increase when compared to the same period last year, and the highest level in any quarter since Q1 2014.
According to the report, the quarterly rise was largely driven by creditors voluntary liquidations, which increased by 6.9 per cent compared to the previous three months.
However, the Federation of Small Businesses (FSB) suggests that the large annual rise can be attributed to the “immense strain” that small businesses are under with “rising employment costs, business rates and sustained political uncertainty”.
Late payments are also plaguing businesses, particularly those in the construction sector, with more than 3,000 firms going under in the year ending June 2019.
The FSB also cites the downfall of other labour-intensive industries, such as administration, hospitality, and retail, who are struggling to meet the demands of higher wages, automatic enrolment and skills shortages.
Commenting on the figures, FSB Policy & Advocacy Chairman Martin McTague said uncertainty is now also making it harder to invest, plan and grow.
“Central to this is the unknown nature of what the UK’s future relationship with the EU will look like and the growing risk of a cliff edge no deal Brexit on October 31, for which smaller businesses are simply not prepared,” he said.
“Smaller firms are under the cosh more than ever and it’s time for interventions to help prevent more businesses becoming insolvent.”
In light of the figures, the FSB has now called on the Government to introduce the “automatic issuing of Economic Operator Registration and Identification numbers to VAT-registered firms that currently trade goods exclusively with the EU” and access to “Brexit vouchers” to help smaller businesses to prepare for a no deal scenario on October 31.