SPIRALLING energy prices could be the “last straw” for well-established businesses that have found it harder than expected to recover after the pandemic, an expert has said.

The warning comes after corporate insolvencies rose in July by 7.5 per cent month-on-month to 1,827.

That was an increase of 66.7 per cent on the figure for July 2021.

​Mike Pavitt, immediate past chair of the insolvency industry body R3 in the southern region including Hampshire, said: “In recent months, as we all know only too well, economic pressures have been hitting business from every angle.

“The increase in corporate insolvencies in July was driven by a rise in Creditors’ Voluntary Liquidations (CVLs), which were 59.9 per cent higher than for the same time last year and 60.1 per cent higher than pre-pandemic levels in 2019.

“This suggests that a growing number of company directors are choosing to close their businesses, perhaps having concluded that current economic conditions make the company’s long-term survival impossible.”

He said the government available to businesses during the pandemic had kept some businesses afloat that otherwise would have folded – but there was “more to it than this”.

“For our part, we have certainly seen an uptick in new enquiries, many from well-established companies finding it more difficult than anticipated to clear government-backed loans taken out during the pandemic, and/or facing claims and litigation, tax obligations and/or inflationary pressures which they have not been able to mitigate as successfully as they expected,” he said.

“Others have simply grown tired of swimming against the tide for so long and the unprecedented hikes we are seeing now in wholesale energy prices being charged to business customers may be the last straw.”

July also saw personal insolvencies fall 12.7 per cent since June to 9,190, although the figure was still higher than last year – although bankruptcy numbers rose 7.9 per cent.

Mr Pavitt, who is a partner and head of corporate restructuring and insolvency at Paris Smith LLP solicitors in Southampton, said: “Clearly things are only set to get tougher over the coming months, even allowing for the likelihood of further action by government to soften some of the blows.

“Even so, it is by no means all doom and gloom. Businesses must of course take such pressures seriously and adapt their approach accordingly but many of the directors we are talking to are just being prudent, planning for the worst even whilst hoping for the best.

“This is good business practice and will serve to protect boards from personal exposure over the long-term.”