UK firms face highest compulsory liquidations in ten years

The number of companies in the UK going into compulsory liquidation reached its highest level in over ten years last month. In February, 393 firms in England and Wales were ordered to close by a court due to their inability to pay debts. This is the highest monthly figure since September 2014. Compulsory liquidation is different from voluntary closure. While 2,035 companies shut down in February, that number includes those that chose to close, not just those forced to by a court. Among these, there were 1,520 voluntary liquidations, 115 administrations, and seven voluntary arrangements. Experts warn that rising costs ahead of tax and minimum wage increases in April are creating a difficult environment for businesses. David Hudson from consultancy FRP said both businesses and consumers are reducing spending, which lowers demand and is not sustainable for companies. The UK's economy contracted by 0.1% in January, adding to concerns for the Labour Party ahead of its Spring Statement. The construction industry is particularly affected, with 17% of insolvencies coming from this sector. Kelly Boorman of RSM UK said high debt and weak supply chains are significant challenges. Additionally, the Bank of England is likely to keep interest rates at 4.5%, keeping borrowing costs high. In Scotland, insolvencies rose by 10% year-on-year to 103, while Northern Ireland saw a 20% decrease with 21 insolvencies. Experts fear that the upcoming rise in costs could lead to even more business failures in the UK.