THE highest insolvency figures for 13 years have laid bare the “major impact” of inflation and Covid, an industry leader has warned.

The seasonally-adjusted number of corporate insolvencies reached 5,629 in the second quarter of this year – 12.6 per cent more than the quarter before.

The figure was up 81.3 per cent on the same period the previous year and was the highest since the 5,749 recorded in the third quarter of 2009, in the aftermath of the banking crash.

Garry Lee, chair of R3’s Southern and Thames Valley region, which includes Hampshire and Dorset, said: “The latest quarterly corporate insolvency figures lay bare the major impact inflation and the legacy of the Covid pandemic is having on businesses.

“They show the highest levels of corporate insolvency on a quarterly basis in more than 10 years and a significant increase on the first three months of 2022.

“This has been driven by a rise in all forms of insolvency process – but Creditors’ Voluntary Liquidations have peaked to their highest recorded figure of 4,908, suggesting that many directors are opting to close their businesses as they lack confidence in their trading prospects in the current climate or feel that they are unable to continue in the face of increasing levels of debt.

“The steady rise in compulsory liquidations we’ve seen since the start of the year also suggests that creditors are now making use of their power to issue winding-up petitions to try and claw back monies they are owed.”

The insolvency figures were published before the Bank of England put up interest rates by half a percentage point to 1.75 per cent and warned of a worsening economy.

The Bank said the UK would enter five consecutive quarters of recession and that inflation would peak at 13.3 per cent in October, the highest level since September 1980.

Mr Lee, who is an associate director in the recovery and restructuring services department at professional services group Evelyn Partners’ Southampton office, added: “The current economic headwinds are only likely to get worse before they get better.

“Businesses could have a tough second half of the year.

"For company directors and owners concerned about their prospects in the months ahead, now is the time to make sure they have a clear plan in place for the future.

“They are urged to stay vigilant for the first signs of business distress and seek advice from a qualified and regulated professional as soon as they become concerned.”

Personal insolvencies fell 10.1 per cent on the previous quarter to 28,946. The figure was up 6.5 per cent on the same period in 2021.