August sees highest number of UK insolvencies this year

A new analysis by risk and financial advisory firm Kroll has revealed that August saw the highest number of UK company insolvencies this year. 99 companies entered administration last month, as UK businesses struggled with a range of headwinds, including rising energy bills and soaring costs.

The figure represents a 41 per cent increase on the number of insolvencies seen in August 2021 and brings the total number of UK administrations this year to 522. Despite this sharp increase, Kroll pointed out that administrations still remained below pre-pandemic levels.

The UK construction sector has been the worst affected so far in 2022, with 87 administrations this year to date. Companies in the construction industry have been badly hit by rising raw material costs, labour shortages and severe supply chain disruption.

Construction firms are also highly energy-intensive, meaning that have been particularly exposed as energy bills have soared since Russia’s invasion of Ukraine. Other sectors that had raised serious concerns about the devastating impact of rising energy bills have included manufacturing, hospitality and education.

The analysis comes as the UK government has unveiled a temporary six-month energy price cap to help businesses survive the rising cost of oil and gas.

Despite rising UK insolvencies and energy bill increases, the new cap on business energy bills will provide some respite for UK businesses over the winter, while consumer spending could be boosted by the recently announced £2,500 household energy price cap.

Commenting on the new figures, Kroll’s UK Head of Restructuring David Fleming said: “As conditions grow harder for businesses to thrive, the economic health of the UK companies will be monitored closely to assess the impact on consumers and the economy."

“Despite this, we still expect to see a lower number of administrations than originally envisaged this year due to the continued support afforded to businesses through COVID loans, rate reliefs, and support from creditors."

“The increase in the number of businesses across retail and leisure and hospitality entering administration might indicate a slowdown in consumer spending confidence, however the new energy price cap may encourage renewed growth which could see these numbers begin to slow.”


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