43% jump in companies declared bankrupt in England and Wales

The number of companies declared bankrupt in England and Wales rose 43% in August, according to government data, raising concerns for the health of the UK economy.

The Insolvency Service said there were 1,933 bankruptcies in August, compared to 1,348 in the same month last year. Before the Covid-19 pandemic hit, it was 42% higher than the August 2019 level.

Economists worry that businesses will increasingly struggle as consumers cut spending amid high inflation. The government has stepped in with an energy price freeze that will ease the shock of increased costs of gas and electricity, but the unit price paid by households this winter will still be more than double the level of recent years,

At the same time, businesses face similar energy price pressures and other cost escalations. The government has promised “equivalent support” for six months, but the prime minister’s office has acknowledged that details of the package may not be available for several weeks.

Business groups have complained that the delay in support is likely to force many companies into bankruptcy, as they face inevitable rising bills.

The prime minister, Liz Truss, and the chancellor, Kwasi Quarteng, are expected to reveal further details of their package to prevent the UK economy from shrinking. mini budget on friday 23 september, However, some economists have warned that a recession could be inevitable. Bank of England predicted a long recessionEven if without taking into account the policies of the new government.

Kallum Pickering, a senior economist at Berenberg, an investment bank, said: “While the setting of consumer energy prices, as well as potential near-term cuts in taxes, could lessen the blow to real income, such measures could only exacerbate the recession. And don’t stop it completely.”

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Retail sales fell more than expected in August, raising concerns about the UK economy. Pound took a hit after data 37 year low against US dollarReflects traders’ concerns about the economy.

Some British companies were saved from the economic turmoil of the past two and a half years by unprecedented government pandemic support. This included the furlough scheme, which paid the wages of those who could not work during the lockdown, and a range of loan schemes.

However, corporate insolvency in England and Wales has increased markedly since the pandemic hit less than 750 per month in February 2021.

Data collected separately for Scotland and Northern Ireland showed higher levels of corporate failures than in recent months.

Read full story at the guardian.com

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