August saw highest number of companies collapsing this year, analysis shows
Businesses have been grappling with higher costs and steeper energy bills in recent months, worsened by the Russian invasion of Ukraine.
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Your support makes all the difference.August saw the highest number of insolvencies this year as nearly 100 companies went into administration amid worsening financial pressures.
Businesses have been grappling with higher costs and steeper energy bills in recent months, worsened by the Russian invasion of Ukraine which began in February.
New analysis showed that 99 companies went into administration in August, a 41% increase compared with the same month last year.
It brings the total number of companies going bust to 522 since the beginning of the year, according to analysis by global risk and financial advisory company Kroll.
As conditions grow harder for businesses to thrive, the economic health of the UK companies will be monitored closely to assess the impact on consumers and the economy
The construction sector has seen the highest number of insolvencies this year, with 87 companies handing over the reins to an administrator.
Among the construction firms that collapsed in August was Yorkshire-based Harris CM, which blamed spiralling raw material costs in particular for its demise.
It comes as construction giants have reported soaring costs of raw materials such as cement and steel and higher staff pay as the sector continues to face critical labour shortages.
And as a heavy energy user, the industry is especially exposed to energy price rises which are putting further pressure on margins, economists have said.
The Government has pledged to provide energy bills support after small business groups warned over heavy debts that could lead to a surge in closures this autumn.
Details of the multibillion-pound support package are expected to be unveiled on Wednesday, with businesses set to receive at least six months of financial support.
More hospitality businesses could also avoid collapse in the coming months as the energy price freeze for consumers is set to give households more spending power, Kroll said.
David Fleming, UK head of restructuring at Kroll, said: “As conditions grow harder for businesses to thrive, the economic health of the UK companies will be monitored closely to assess the impact on consumers and the economy.
“Despite this, we still expect to see a lower number of administrations than originally envisaged this year due to the continued support afforded to businesses through Covid loans, rate reliefs, and support from creditors.
“The increase in the number of businesses across retail and leisure and hospitality entering administration might indicate a slowdown in consumer spending confidence, however the new energy price cap may encourage renewed growth which could see these numbers begin to slow.”
The total number of administrations in 2022 remains below pre-pandemic levels, Kroll added, which averaged 119 a month by August 2021.