The number of company insolvencies has reached the highest level since 2014, according to the latest data.
The figures were published in the Insolvency Service’s second quarter (Q2) 2019 report.
Overall, the number of underlying company insolvencies between April and June 2019 increased by 2.6 per cent compared to the previous quarter, to 4,321.
This represents an 11.9 per cent increase when compared to the same period last year, and the highest level in any quarter since Q1 2014.
The report states that the rise was driven largely by creditors entering voluntary liquidations, which has increased by 6.9 months in comparison with the first quarter 2019 figures.
However, the Federation of Small Businesses (FSB) suggests that the large annual rise can be attributed to the “immense strain” that small businesses are under with “rising employment costs, business rates and sustained political uncertainty”.
Late payments are also hampering businesses, with those in the construction sector facing significant issues, as more than 3,000 firms went under in the year ending June 2019.
The FSB also cites the downfall of other labour-intensive industries, such as administration, hospitality, and retail, who are struggling to meet the demands of higher wages, automatic enrolment and skills shortages.
Martin McTague, Chairman of Policy & Advocacy at the FSB, said: “Central to this is the unknown nature of what the UK’s future relationship with the EU will look like and the growing risk of a cliff-edge no-deal Brexit on October 31, for which smaller businesses are simply not prepared.
“Smaller firms are under the cosh more than ever and it’s time for interventions to help prevent more businesses becoming insolvent.”