A RISE in company insolvencies has triggered a warning for businesses to prepare for the phasing out of government Covid support.

Latest figures show corporate insolvencies rose 8.8 per cent to 1,011 in England and Wales in May.

That was up 6.9 per cent on the May 2020 figure. Personal insolvencies fell 14 per cent on the previous month to 8,482, or 38.7 per cent lower than May 2020.

Southampton-based Garry Lee, who chairs the restructuring and insolvency industry body R3’s southern region, said: “Times remain tough for businesses.

“Government support has held off rather than halted the economic damage of the pandemic, preventing a serious rise in insolvency levels.

“Many business owners in Southampton are now having to look ahead to how they’ll cope when these measures are withdrawn in the weeks and months ahead, and if they aren’t they should seriously start to consider how they may be affected.”

Mr Lee, associate director in the recovery and restructuring services department at accountancy firm Smith & Williamson’s Southampton office, added: “Many businesses are more confident about their ability to grow but many are still concerned about the continued effect of Covid restrictions.

“There’s still a lot of ground to make up to fully recover from the unprecedented economic contraction in April 2021.

“Consumer spending has increased, but it’s still below 2019 levels, and while consumer confidence is improving, people are still worried about the future of the economy.”

The Coronavirus Job Retention Scheme, or furlough, is due to cease at the end of September. As of May 14, 11.5million employee jobs had been furloughed, at a cost of £64billion.

Employers will be required to contribute 10 per cent towards their staff’s furlough pay for July and August and 20 per cent for September, as well as paying national insurance and pension contributions.

Mr Lee said: “When it comes to personal insolvencies, government and private sector support has aided many people – with the furlough scheme protecting millions of jobs.

“However, those who have been furloughed may have struggled to cope with any reduction in salary, as well as the potential uncertainty around their employment.

“We hope the new Debt Respite Scheme, which gives people in debt a breathing space free from creditor pressure in which to seek help, will be taken up by more and more people, after its launch in early May.

“We know it can be tough to talk about financial concerns – whether they’re personal or business – but doing so can make a huge difference.”