Insolvencies of companies in England and Wales are at their highest level since 2009.

According to official statistics, corporate insolvencies in England & Wales reached their highest level since global financial crisis six months prior to September. Businesses were struggling with high borrowing rates and a slowing of demand.

Insolvency Service statistics from Tuesday revealed that there were 6,208 registered company insolvencies between July 1 and 30 September in England and Wales.

The level of the market was 10 percent higher than the same period last year and 2 percent lower than the previous quarter, when it reached a new high since the financial crises.

The increase in insolvencies is due to the end of government Covid-19 schemes, debt accumulation post-pandemic, and high inflation.

The data also revealed the impact of rising borrowing costs, since the Bank of England began raising rates in November 2021 from a record-low of 0.1 percent to the current rate of 5.25 percent to slow down rapidly increasing prices.

The Insolvency Service stated: “The two last quarters have seen the highest quarterly numbers insolvency since Q2 2009. And the highest number of creditors’ voluntary Liquidation since the beginning of the series 1960.”

Insolvency is a formal measure taken by a company when it cannot pay its debts. Markets expect the BoE to leave interest rates unchanged at their current elevated level until at least the middle of next year. The next monetary policy decision is due on Thursday.

Mark Ford, partner at Evelyn Partners in restructuring and recovery, said that company insolvencies had risen this year, to levels not seen in the years following the financial crisis. This was against a backdrop of rising costs, an uncertain and harsh macroeconomic climate, and continued friction in supply chain and trading conditions.

Economists have warned that a rise in insolvencies could be a concern for the economy, as it may lead to job losses and impede output growth.

Olga Galazoula is the global head of Ashurst’s restructuring and special situation group.

Data showed that the sectors most affected by insolvency were those of wholesale and retail trade, manufacturing, and accommodation and food services, all of which were impacted by low demand, high energy costs, and high wage bills.

The Office for National Statistics released data that showed retail sales in September were 2,5% lower than February 2020, reflecting the effects of high borrowing costs and inflation.

The number of liquidations relative to the active companies in the four-quarter period ending September was the highest since 2014.

Benjamin Wiles is the managing director of financial advisory firm Kroll. He said that many sectors are vulnerable to debt growth and will be hoping for an enjoyable Christmas. He said that the outcome of this could make or break a sector.

The cost of borrowing, the lack of working capital and low consumer confidence will continue to drive up prices over the next year.