The number of firms in England and Wales going bust last month rose by 16% year-on-year, according to official figures.

Commentators said the 2,191 company insolvencies in July showed how many businesses were still recovering from the impact of high inflation and borrowing costs despite growing optimism about the UK’s economic outlook.

The figure was 7% down on June’s total, but insolvency levels remain much higher than those seen during both the COVID-19 pandemic and in the years following the 2008/09 financial crisis, officials said.

Rebecca Dacre, a partner at advisory firm Forvis Mazars, said the data was “a strong reminder that many businesses are still a long way off from recovery”.

She added: “Despite initial signs of improvement in the economy, some sectors are still experiencing severe difficulty as interest rates remain high.

“Falling consumer spending during the cost of living crisis has also made it incredibly difficult for some businesses to survive. The retail and hospitality sectors have borne much of the brunt… unless we see a stronger economic recovery, it is likely we will see more companies pushed towards insolvency.”

Sarah Rayment, head of global restructuring at finance firm Kroll, said there was no need for “alarm” because “looking at the big picture there are reasons to be cheerful”.

She added: “However, green shoots do not immediately translate into good news for all companies. Borrowing costs are still high and many companies are looking to refinance in the coming months.

“The question is whether they will have enough financial headroom with higher borrowing costs or whether their lenders will give them enough leeway. It is perhaps more likely that we will see more restructuring activity.”

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The seasonally adjusted figures, from the Insolvency Service and Companies House, include 320 compulsory liquidations, the highest monthly total since before the pandemic.

Meanwhile, individual insolvencies rose by 24% year-on-year in July, separate official figures showed on Tuesday.

The total of 10,524 was similar to June’s figure, and included 634 bankruptcies, 4,163 debt relief orders and 5,727 individual voluntary arrangements. However, levels remain below those seen during the pandemic.

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