Businesses are declaring bankruptcy at the swiftest pace since the global financial crisis, with interest rates reaching their pinnacle since 2008.
The Insolvency Service reported that insolvencies in England and Wales escalated to 6,342 in the quarter ending in June.
This figure represents the highest count since the second quarter of 2009, a period marking the UK’s trough of the recession triggered by the worldwide banking crisis.
The surge in insolvencies occurs concurrently with the Bank of England’s decision to increase rates 13 times in a row, pushing them to a 15-year high.
David Kelly, the chief of insolvency at PwC, cautioned that the ascent in rates is expected to lead more large-scale businesses into bankruptcy as they struggle with mounting debt obligations.
He stated: “There is likely to be an uptick in the insolvency rate amongst larger companies this year. These firms, which have until now weathered the economic challenges, typically have larger loans and heavier debt loads to service.
“Similar to homeowners shifting from fixed mortgage rates, many businesses haven’t yet refinanced their debt. This suggests that the full effects of increased interest rates could still be on the horizon.”
