Some 10,000 individuals became insolvency in August, making the toll 5% lower than July – but 16% higher than over the same month last year.

Summer sun and a packed sports calendar has been seen to have eased the challenges faced by retail and hospitality industries in England and Wales, according to the latest findings from the government's Insolvency Service (IS).

The 16% rise registered in August against the same month last year is attributed to ongoing challenges in business services, construction and engineering, with August 2024's figures revealing how 10,000 individuals entered insolvency in England and Wales in August 2024, which was 5% lower than in July 2024, but a notable 16% higher than in August 2023.

Individual insolvencies came to 594 bankruptcies, 4,166 debt relief orders (DROs) and 5,240 individual voluntary arrangements (IVAs).

According to the latest data, the last five months have seen the highest monthly numbers of DROs since their introduction, while the total of IVAs counted in August emerged as being similar to the average monthly number over the past year. As a positive indicator, bankruptcy numbers held at around 50% of pre-Pandemic levels and were also lower than numbers seen over the past 12 months.

Additionally, there were 7,256 Breathing Space registrations in August 2024. This is 5% lower than in August 2023.

In reaction to the IS update, national tax and finance advice expert Azets, which has an office at Gloucester Business Park, said "harsh realities" are setting in as liquidation numbers rise, closing the gap with administrations.

Lin Gartland, a leading insolvency practitioner with the UK top 10 accountancy and advisory firm, said: "These figures are not surprising given the economic headwinds businesses have been contending with. High interest rates, inflationary pressures, and tightened credit conditions continue to push companies, particularly SMEs, into financial distress. The August 2024 numbers are reflective of these harsh realities, particularly in sectors like retail, construction, and hospitality, which have been hit hardest."

She added: "The long-term trend shows that corporate insolvencies have been steadily increasing since 2022, exacerbated by the withdrawal of government support measures post-pandemic. Many businesses that survived during that period, with the help of loans and grants, are now facing reality as those financial cushions have evaporated.

"As we look forward, the pressure on businesses is unlikely to ease in the near future. The Bank of England has held interest rates at 5%, and an increasingly cautious consumer market means that we may continue to see elevated insolvency levels into the rest of 2024 and beyond. That said, for businesses that act early and engage with licensed insolvency practitioners, there are paths to recovery."

Liquidation is often the last resort, she added, but she urged businesses in difficulty to reach out: "Administration can be a lifeline for companies when tackled early enough. In many cases, administrations allow businesses to restructure and emerge stronger. 

"Engaging with a licensed insolvency practitioner early on provides business owners with the best chance of survival and, in some cases, growth. Too often, companies wait until it's too late to explore options beyond liquidation."