Personal insolvencies increased dramatically in the first quarter of 2022, according to the latest Government figures. Between January and March, the Insolvency Service reported 32,305 personal insolvencies, 14% more than during the first quarter of 2021.
Clearly, the effects of the Covid-19 lockdowns are in full swing. Serious financial downfalls are to be expected as the pandemic put immense pressure on businesses of all sizes.
The pandemic exposed the weaknesses in many British high street retailers. Consequently, established brands such as Debenhams, Jessop’s, and others collapsed.
The cost of living crisis has negatively impacted most individuals’ finances. Similarly, some SMEs (especially those in the retail and hospitality sectors) have suffered unrecoverable losses.
Interestingly, individual voluntary arrangements (IVAs) have increased this year while the number of bankruptcies fell. This could be a testament to people’s will to salvage their situations rather than resort to bankruptcy.
Although bankruptcy terms aren’t as severe as they once were, it’s reassuring the procedure isn’t being used as a get-out option.
Another staggering statistic is that business failures have more than doubled (112% increase) compared to the first quarter of 2021. This is likely to be driven by the withdrawal of Government support and other measures. Many businesses and SME’s are yet to see their revenues return to pre-pandemic levels.
Also, as these figures only reflect the first quarter, they do not account for:
- Recent hikes in the cost of living
- Inflation hitting a 30-year-high of 7%
We’ll watch this space to see how these figures progress in the coming months.