We wrote earlier this year about the rise in insolvencies in the UK at the end of the summer, as persistent inflation, the pain of increasing interest rates, higher energy bills and the end of pandemic measures all took their toll. We noted that the autumn continued in a similar fashion, with company insolvencies in the UK at the highest level since the financial crisis. And whilst headline inflation may since have levelled out, the outlook for growth remains gloomy. Last week the Office for National Statistics reported a drop in domestic production between September and October, meaning that the UK finishes the year with output below that which it had in January. Growth forecasts also paint a sobering picture, with the UK expected to continue to follow this trend for the rest of the decade. Still, such a tepid performance may be a relief to some – the Bank of England predictions in November 2022 of a “prolonged” recession have, so far, not been borne out. Its current projections are for weak growth, well below historical averages. 

The UK isn’t alone in facing many of these global challenges, with the Financial Times reporting this week that the rates of insolvencies for companies in the US, in countries across the EU and in Japan are also increasing rapidly. The common causes identified echo with those experienced in the UK, and come together with the prediction that cheap historical debt will continue to need to be refinanced through 2024 and the warning that to the extent such finance is available, it will come at an increased cost. Difficult times lie ahead.