U.K. Insolvencies Rose as Government Withdrew Support

Lizzy Burden
Fri, January 28, 2022, 


More U.K. companies went bust in 2021 as the government tapered back its pandemic-support measures for businesses.

Company insolvencies for England and Wales jumped 11.2% to 14,048 from the previous year, though that was still below levels recorded before Covid-19 hit, according to data released by the Insolvency Service on Friday.

Some 90% of insolvencies were creditors’ voluntary liquidations, or CVLs, the process by which directors of a company choose to place the business into liquidation to pay off debts. Those climbed by a third from 2020 to the highest annual number since the financial crisis in 2009.

The Insolvency Service said the increase “coincided with the phasing out of measures put in place to support businesses during the coronavirus pandemic.” Those included the furlough program to bolster wages, which ended in September. The number of CVLs in the fourth quarter reached the highest since records began in 1960.

It follows warning signs last year that companies were saddled with debt burdens that they were unlikely ever to repay.

Sectors that saw disproportionately bigger gains in insolvencies last year included companies dealing in construction, and accommodation and food services activities, as well as vehicle repairs.