The number of company insolvencies in England and Wales hit its highest level for 13 years in the second quarter of the year, according to official figures.
The Office for National Statistics (ONS) recorded a total of 5,629 business failures between April and June.
It was the highest quarterly number since the third quarter of 2009.
Construction, manufacturing, accommodation and food service activities businesses accounted for the bulk of the insolvencies, the ONS reported.
Cost of living and economy latest
In a clear indication of the strain faced by firms, it added that more than one in 10 UK-wide reported a moderate-to-severe risk of insolvency in August.
The dire figures reflect a surge in costs, particularly from rising energy bills, piling pressure on businesses at a time when most were recovering from two years of COVID-19 disruption.
Insolvencies fell in 2020, when the government rushed to help businesses survive the pandemic, but they have risen since 2021.
Firms have been grappling rising costs since pandemic restrictions were relaxed.
Higher demand for goods and services, coupled with supply chain disruption, have all contributed to a tougher environment for firms to navigate.
While the latter pressure has eased, the surge in energy costs was exacerbated by the effects of Russia’s war in Ukraine.
It has made not only lighting and heating but production costs more expensive, with companies under huge pressure to pass those hikes on to customers.
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How cost of living crisis is biting business
It is a difficult juggling act, however, to achieve as such moves risk losing business.
The tough market was met with a chorus of frustration from businesses who, like consumers, were grappling eye-watering increases to bills – in some corporate cases of 600% – and demanding action to help bring them down.
It was not until last month that the Truss-led government revealed aid for businesses – in line with the help offered to households – though the Energy Bill Relief Scheme that will cap wholesale costs per unit of energy.
The scheme is due to last throughout this winter – with only targeted help promised thereafter.