Official figures shows that insolvency increased in January and the Insolvency Service said this represents a 7% rise compared to January 2022.
Higher borrowing costs and elevated levels of inflation for companies are also to blame along with “late payments” and higher requests to “extend credit terms.”
The Insolvency Service said that in England and Wales insolvencies hit 1,671 in January this year and that 189 compulsory liquidations were recorded in January, rising 52% year-on-year.
Ed Macnamara, head of restructuring at PwC, said, “While the number of company insolvencies in January is down on the month before, any respite is likely to be short-lived.
“The data, which shows a 7% rise on the year before, serves as a reminder that we are still in the midst of a difficult trading environment with rising interest rates and high inflation which, when combined, generally results in more company failures.
“We’re also seeing an uptick in both late payments and the number of requests to extend credit terms.
“This domino effect is likely to increase the squeeze on businesses already struggling with their debts and might mean that some are forced into insolvency.”
An HMRC spokesman said, “We take a supportive approach to dealing with customers who have tax debts and only file winding-up petitions once we’ve exhausted all other options, in order to protect taxpayers’ money.”