The number of UK companies facing insolvency is set to reach its highest level since the 2009 financial crisis, with insolvencies rising by 10% year-on-year in the three months ending

September. In addition to the increased insolvencies, there has been a significant rise in the number of firms in "critical financial distress," with a 25% increase in the last three months, according to Begbies Traynor.

These businesses have county court judgments exceeding £5,000 against them, often signaling impending financial collapse. Factors contributing to this distress include rising inflation and borrowing costs, coupled with reduced consumer confidence and demand.

The construction sector has been particularly hard-hit, with a 46% increase in businesses facing critical distress in the last three months, largely due to higher borrowing and material costs. Support measures provided during the COVID-19 pandemic, such as furlough schemes and loans, have ended, coinciding with increased inflation and interest rates, impacting company finances and consumer spending. Photo by Phil Whitehouse, Wikimedia commons.