
The latest UK government statistics reveal a 5% year-on-year decline in registered company insolvencies across the UK, with 23,872 cases in 2024.
According to data released by The Insolvency Service, there was a 6% month-on-month decrease in company insolvencies for December 2024 and a 14% drop compared with December 2023.
In December 2024, the number of registered company insolvencies in England and Wales stood at 1,838.
However, an expert has warned that this seeming progress might not indicate sustained long-term stability.
Menzies business recovery partner Giuseppe Parla emphasised that the December statistics contradict an ongoing trend, and many businesses may continue to face financial uncertainty in the New Year.
In an emailed statement, Parla said: “2024 was a year of financial uncertainty, with two separate Governments searching for the golden ticket to achieve economic growth. The result, however, was reduced business confidence, a high bank base rate and an enhanced tax burden for businesses. While the December statistics paint a picture of economic stability, they will likely buck the trend.”
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By GlobalDataParla noted that the “New Year is likely to bring in more of the same” due to the impact of increased employer national insurance contributions on hiring and retention costs, potentially worsening financial difficulties for many companies.
He also pointed out changes in business asset disposal relief and capital gains tax as factors that could reduce asset values and increase tax liabilities.
These changes may leave businesses with fewer resources to navigate economic challenges, despite the current decline in insolvencies.
Despite these hurdles, Parla mentioned that reduced market competition could present opportunities for well-positioned companies.
“But where there is uncertainty, or a lack of stability in the economy, this provides companies with strong foundations an opportunity to grow, as those with shorter foresight begin to fall,” he added.
Parla urged business to take proactive measures at the earliest signs of financial challenges as acting promptly could provide access to a wider range of solutions, increasing the likelihood of maintaining profitability and sustaining operations.