The number of companies in England and Wales rose by 43% in August, according to government data, raising concerns about the health of the UK economy.
There were 1,933 bankruptcies in August, compared with 1,348 in the same month last year, the bankruptcy service said. In August 2019, it was 42 percent above the level before the Covid-19 outbreak.
Economists worry that businesses are struggling as consumers cut back on spending amid high inflation. The government has introduced a freeze on energy prices to help offset rising gas and electricity costs, but the cost of a house this winter is more than double what it has been in recent years.
At the same time, businesses face similar energy price pressures and other price increases. The government has promised “proportionate support” for six months, but the Prime Minister’s Office has admitted that details of the package may not be available for several weeks.
Business groups have complained that the delay in support could lead many companies to bankruptcy as they cope with unavoidable utility bills.
Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are expected to unveil more details of their package to prevent the UK economy from shrinking with a smaller budget on Friday 23 September. However, some economists warn that a recession may be inevitable. The Bank of England has predicted a long recession, regardless of the new government’s policies.
Callum Pickering, senior economist at Bernberg investment bank, said: “While adjusting consumer energy prices and possible recent tax cuts could soften the shock to real incomes, such measures could reduce the fallout from the recession. And it doesn’t completely protect it.
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Retail sales fell more than expected in August, adding to concerns about the UK economy. The pound hit a 37-year low against the US dollar after the data, reflecting traders’ concerns about the economy.
Some British companies have been spared much of the economic crisis of the past two-and-a-half years with unprecedented government support. That includes the furlough scheme, which pays wages to those unable to work during the lockdown, and a series of loan schemes.
However, corporate losses in England and Wales have risen sharply since February 2021, when the epidemic hit below 750 per month.
Separate data for Scotland and Northern Ireland showed higher corporate failures than in recent months.
