Rising inflation and the the cost-of-living crisis is forcing many South West business into insolvency, new research reveals. A total of of 57 companies in the region went bust last month, BusinessLive can exclusively reveal.
The figure is down 11% from 64 in June last year - but the retail and service sectors in the West Country have seen an increase in corporate insolvencies, and to a level greater than across the rest of the UK.
The research, carried out for BusinessLive by professional services firm Evelyn Partners (formerly Tilney Smith & Williamson), examined regional insolvency figures from the UK's official public record, The Gazette . It includes businesses registered in the South West and those with directors based in the region.
Of the 57 corporate insolvencies in the region, the majority (53 in total) were creditors’ voluntary liquidations which resulted in the complete closure of the business. There were only three company administrations and one company voluntary arrangement recorded in June, where there may be a prospect the company, or part of it, can be rescued.
A family-owned transport company near Bristol is one of the businesses that collapsed into administration in June. Toogood International Transport and Agricultural Services, which appointed business advisory firm Mazars as administrators on June 21, ceased to trade and all staff were made redundant.
The sectors most affected by insolvencies last month were construction, retail and service, with numbers also rising in the manufacturing and real estate sectors.
Mandy Pope, senior manager in Evelyn Partners’ restructuring and recovery services team in Bristol, said the effect of rising inflation and the cost of living was "understandably" resulting in less money being spent on the high street.
“If it continues, this may in turn start to have an impact on the housing market when combined with any further interest rate increases which may be implemented by the Bank of England in an effort to stem rising inflation," she said.
“The region has a wealth of hospitality and holiday businesses and with the summer well underway there may be a tendency for businesses already struggling to expect and rely on an upturn over the coming months based on previous years. Those businesses may already be struggling to pass on the increased costs of utilities and also with supply chain issues.”
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