BUSINESSES have been urged to stay alert for the signs of financial distress after insolvencies rose substantially above pre-pandemic levels.

Although corporate insolvencies fell month-on-month in December, the figures were almost a third higher than the same month in 2019 and up by a fifth on 2020.

Garry Lee, chair of the insolvency trade body R3 in the Southern and Thames Valley region, said: “The monthly fall in corporate insolvencies has been driven by a reduction in all forms of corporate insolvency processes.

“However, the annual and two-yearly increases in corporate insolvencies have been driven by a rise in Creditors Voluntary Liquidations, which suggests that the economic situation is pushing many company directors to voluntarily close their businesses before that decision is made for them.”

There were 1,486 corporate insolvencies in December, down 11.4 per cent on the previous month but up by 20.1 per cent on December 2020 and by 32.7 per cent on December 2019.

Personal insolvencies stood at 8,434, down 12.4 per cent on December 2020.

Mr Lee said business owners in Hampshire needed to “remain alert”.

“If the measures lead to their business becoming financially distressed, they need to seek advice as soon as this happens from a qualified and regulated advisor," he said.

He said the December figures reflected a “tough end” to a “torrid year”.

“Increasing Covid cases, rising costs and falling consumer confidence hit footfall and sales. Company directors and management teams also had to work in the midst of the new Covid restrictions, which will have affected day-to-day operation, customer behaviour and revenue levels.

“This is especially true in sectors like retail and hospitality, who normally have their busiest periods in December, but faced an unhappy Christmas.”

Personal insolvencies fell by 10.1 per cent month-on-month to 8,434 in December, 12.4 per cent lower than December 2020.

Mr Lee said: “Times are still tough for people in Southampton and Hampshire.

“Many are worried about the future of the economy and their own personal finances, and are cautious about how they spend their money and what they spend it on.

“Inflation is also becoming a problem, with rising energy bills and increasing household costs squeezing people’s finances.”