In the same month last year, the figure was only 1,801 while in February 2019 there were only 1,213 company insolvencies. This month’s figures were higher than levels seen while the government support measures were in place in response to the pandemic and were significantly higher than pre-pandemic numbers.

There were 217 compulsory liquidations, which was 35% higher than February 2023, while the number of administrations was concerning at 166, up 54% on the same time last year.

Julie Palmer, partner at Begbies Traynor, said: ‘The fact that more businesses failed in February this year than in the same month during or before the pandemic paints an unhappy picture for the state of the UK economy.

‘This environment is putting a huge amount of pressure on businesses and the challenge business leaders now face will be insurmountable for many. 

‘After a decade of interest rates floating around zero, many businesses simply were not prepared for higher interest rates for a sustained period of time having loaded up on cheap debt during the boom years.

‘Sadly, the debt storm has now broken and the data from the Insolvency Service highlights how this macro-economic environment is wreaking havoc on small and medium businesses across the country.’

The worst affected sectors last month were construction (295 insolvencies), hospitality including accommodation and food/beverage (262), and retail (248).

Chris Tate, restructuring & insolvency partner at Azets, said: ‘Despite the UK economy returning to growth this week, the 0.2% increase won’t offset the absence of a post-Christmas boost many business owners were hoping for.

‘For consumers, the cost-of-living crisis continues to reduce discretionary spend, while business overheads remain high and margins low.

‘The forecast remains bleak for companies waiting for the economy to turn a corner. We predict another difficult year ahead for, with business owners forced to make tough decisions. Taking early advice is critical to protecting as much of the business as possible, ensuring a trading entity can emerge and avoiding the total loss of jobs.’

Daniel Staunton, senior associate in the restructuring & insolvency team at Kingsley Napley, said: ‘The facts don’t lie. When you speak to other professionals operating in the restructuring and insolvency field they all report being busier which is reflected in the increased numbers.

‘We can likely expect March 2024 stats to show another incremental increase. What is telling is the comparison against 2023 statistics - new records continue to be broken. This will be an ongoing trend.’

Some commentators expect the current difficult trading conditions will not last as long as expected last December when the UK was in a technical recession.

Matthew Padian, restructuring & insolvency partner at Stevens & Bolton, said: ‘We are expecting the number of company insolvencies to ease off over the next year or so as the UK economy settles down after a bumpy period.  

‘The latest insolvency numbers do not altogether dispel fears of an insolvency wave, but it seems that most businesses are just about managing to keep their heads above water in what remains a relatively stagnant economic environment.

‘Over the rest of this year, we can likely expect some high-profile business failures to follow the likes of The Body Shop and Wiggle, whilst most business will carry on by keeping a steady hand on the tiller. 

‘It remains tricky to point to single trigger points for company failures. The permanent shift to hybrid working patters remains a challenge and eating out is still patchy. One can no longer point to internet retail as the darling of the retail sector as for every struggling high street retailer such as Superdry, there’s a struggling online retailer such as ASOS.’

While the headline figures raise concerns, there are some positive signs in the longer term.

Mark Supperstone, managing partner at ReSolve, said: ‘Significant economic headwinds faced by all sectors over the course of 2023 show no sign yet of a potential respite and continue to hinder the SME community.

‘Whilst February’s figures show a significant (17%) increase from the same time last year, as well as being up from January and December, they are still lower than the peaks we saw last year. It’s clear that things are still very much in flux.

‘Others are predicting a tsunami of insolvencies, but I don’t think this will be the case. I expect insolvencies will stay inflated, above average levels, until Q1 2025 when they might start to drop back down again.

‘A reduction in interest rates and lower inflation at some point this year is a good sign but there is still a lag of about 18 months before this would impact businesses financially.’

Any companies concerned about their financial stability should contact their accountant or specialist adviser.

Staunton said: ‘As always, the message to directors of struggling businesses is to take early advice in order to maximise the time available to find a solution to save their business, whether this be an informal workout, a moratorium in order to protect the company for a period of time in order to allow refinancing, a company voluntary arrangement or a restructuring plan amongst other possible solutions.’