More than 25,000 companies were declared insolvent last year.
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England and Wales saw the most company insolvencies since 1993 last year, although the rate of businesses going bust was not as severe as during the 2008-09 financial crisis when adjusted for a rise in the total number of companies, official data showed.
Britain's Insolvency Service, a government agency, said 25,158 companies were declared insolvent last year, up from 22,123 in 2022.
"It's a stark reminder that, while in terms of interest rates and prices the general feeling might be that the worst is over, the trading environment for businesses in the UK remains pretty onerous," Mark Ford, a restructuring partner at professional services firm Evelyn Partners, said.
British businesses have been under pressure from the highest interest rates in nearly 16 years, rapid increases in energy bills and staff wages, and patchy demand as high inflation forced many households to reduce non-essential spending.
However, financial markets expect the BoE to begin to cut interest rates from May or June. Inflation is forecast to be close to the central bank's 2% target by then, after rising to a 41-year high of more than 11% in 2022.
The Insolvency Service said the total number of registered companies in England and Wales had risen significantly over time, so the rate at which companies went insolvent offered a better guide to long-term trends.
Last year 53.7 companies went insolvent out of every 10,000 trading, up from 49.6 in 2022. This was the highest rate since 2014 but much lower than the rate of 94.8 during the 2008/09 recession.
Company insolvencies in England and Wales fell to their lowest since 1989 in 2020, due to 77 billion pounds ($98 billion) of government-backed COVID-19 emergency loans and barriers to creditors taking court action.
Scotland and Northern Ireland, which have different bankruptcy laws to England and Wales, recorded the highest numbers of company insolvencies last year since 2012 and 2019 respectively.
(Reporting by David Milliken, editing by Wiliam Schomberg)