A DRAMATIC rise in company insolvencies could mean a “rocky road ahead” for businesses now government support has ended, it is claimed.

Corporate insolvencies nationally were up 55.8 per cent year-on-year in September, to 1,446.

The figure was up 7.2 per cent on the previous month.

Personal insolvencies were 33.2 per cent higher than in 2020 at 9,118, and up 9.2 per cent from August.

Garry Lee, chair of the insolvency and restructuring trade body R3 in the south, said: “The dramatic increase in corporate insolvencies compared to this time last year – to the highest level since January 2020 – illustrates just how crucial the government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for the business community now it has ended.

“The monthly increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations, which increased for the third consecutive month.

“This suggests that directors are choosing to close their businesses after deeming their financial survival unlikely after 18 months of trading through a pandemic.

“Despite the fact that businesses have benefitted from two months of restriction-free trading and the economic boost over the summer, conditions are still not back to where they were before the pandemic.

“Consumers are now increasingly cautious about the state of the economy, their personal finances and the increased cost of living and are more wary about spending their money.

“And with widespread supply chain disruption and significant wholesale energy price increases building up between September and October, there is likely to be little slack in the system for businesses and individuals who have yet to get back on their feet following the impact of Covid.”

Mr Lee, an associate director in the recovery and restructuring services department at accountancy firm Smith & Williamson in Southampton office, said the rise in personal insolvencies was fuelled by an increase in individual voluntary arrangements and debt relief order.

“This suggests that more people are in debt and taking steps to resolve the issues they face with their finances. The situation is still tough out there for people,” he said.

“Although September saw increases in job vacancies and the number of people in work returned to pre-pandemic levels, a high percentage of those employed are in temporary roles or on zero-hour contracts, and more than a million people were still on furlough when the programme closed at the end of the month.

“Government support has been a lifeline for many, and initiatives like the Breathing Space scheme have proved welcome support for people in financial distress. However, this support has not been able to help everyone, and many people have had to use savings to cover expenditure during the pandemic.”