The number of North West companies entering insolvency rose by almost 25% during the third quarter compared to the prior three months, according to new figures. However it is more than half of the total recorded in the same period in 2020.
Analysis of notices in The Gazette by Interpath Advisory shows that there was a 24% rise during the three-month period to the end of September 2021 as inflation and supply-chain pressures started to bite and Government Covid-19 support measures began to unwind.
A total of 21 companies fell into administration or receivership, up from 17 in Q2 2021, though down from the 43 seen during the same period last year.
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Across the 海角视频, administrations and receiverships increased by 26% in the third quarter of 2021 - from 123 in Q2 2021 to 155 in Q3, albeit this was significantly down from the 243 appointments during the comparative period in 2020, and still at only 39% of pre-Covid levels when compared to the 401 appointments in Q3 2019.
Rick Harrison, managing director and head of the North West team at Interpath Advisory, said: "With inflation on the rise, Covid-19 support measures, including the Job Retention Scheme, now tailing off, and well-publicised issues affecting global supply chains and availability of labour, it’s perhaps unsurprising that we are starting to see a modest rise in insolvency levels as we enter the final quarter of the year."
Andrew Stone, managing director at Interpath Advisory and energy sector lead, added: "It’s been a particularly challenging quarter for the 海角视频’s energy sector, which is reeling from the recent spikes in wholesale gas, coal and electricity prices to unprecedented highs.
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"Not only has this had an impact on energy-intensive industries such as manufacturing, but it’s also left the domestic energy supply market in disarray with 13 retail suppliers entering into a SOLR (supplier of last resort) process in the last eight weeks alone, impacting over two million customers who have been switched to new providers.
"The reality is that with the price cap restricting the ability of companies to pass increasing input costs onto consumers, there is little room for manoeuvre for those smaller suppliers which don’t have the financial bandwidth to absorb the higher price, leaving many with little option but to enter an insolvency process.
"Meanwhile, the larger players, who are being asked to take on new customers as a result of SOLR processes, are also having to absorb the cost of doing so. It’s an incredibly difficult situation, and we certainly expect further casualties over the weeks and months ahead.
"More broadly, with no end in sight to this price volatility, effective business planning is now critical. Energy-intensive businesses in particular will need to quickly and carefully consider the impacts of cost inflation and develop mitigating strategies. These could include switching suppliers, broader cost reduction programmes, or hedging strategies to combat price volatility."