The latest insolvency data for England and Wales has landed – and according to R3, which is the trade body for the insolvency and restructuring sector, the headlines could be interpreted as positive news.

However, deeper analysis of personal and corporate casualties, R3 suggest, points to concern against a backdrop of cost pressures amid the cost of living crisis.

Corporate insolvencies increased by 5% in January 2024, to a total of 1,769. Compared to January 2023's 1,685 corporate insolvencies, that's a marked fall from the 7.5% recorded back then.

But while personal insolvencies remain 17% below the rate recorded in January 2019 (before the Pandemic took its toll), they showed as increase of 4.3% for the opening month of 2024 - to a total of 8,089. January 2023's tally was 7,756.

Tim Sloggett, South West chair of R3 and MD of advisors Quantuma, said: "On the face of it, the declining year-on-year rate of growth of corporate insolvencies appears to be positive news. However, underpinning this is a decrease in Creditors' Voluntary Liquidations (CVLs) and an increase in administration appointments.

"In recent years, the story has been very much a high volume of small companies closing and being placed into CVL," he added.

With administrations more often used with larger companies than with CVLs, the news that the UK slipped into a recession at the end of last year now appears to be feeding through to larger businesses, he said.

"In particular, the data shows that the main sectors facing challenges include retail, construction and accommodation and food services with insolvencies in these sectors significantly higher than they were prior to the pandemic, rising 141%, 68.5%, and 119.6% respectively compared to 2019 figures."

With personal insolvency numbers rising year-on-year, he said the trend was not unexpected given the cost of living crisis, but that volumes still remain below levels before the Pandemic.

"This may be because the number of Breathing Space processes used also soared to the highest levels since the process was introduced in May 2021, which indicates that this process may be achieving its purpose of providing people with more time to resolve their debt issues and avoid bankruptcy.

"Whilst there are positive signs of lowering inflation, food, fuel, housing and energy costs remain high and are likely to remain key concerns for many households."

He continued: "Since the Pandemic, insolvency practitioners have been given new tools to help rescue businesses. The introduction of the moratorium and restructuring plan help provide businesses with breathing space and an increased chance of restructuring its debts. However, these take time to implement, and anyone worried about their personal or business finances should seek advice as soon as possible. It's such a hard conversation to have, but the sooner you take that step, the more options there are likely to be to rescue the business."