Increasing number of Wigan businesses going to the wall as they struggle with 'perfect storm' of economic woes

Wigan saw an increase in company insolvencies last year compared to the year prior to the pandemic.
Watch more of our videos on Shots! 
and live on Freeview channel 276
Visit Shots! now

The withdrawal of government support and soaring energy costs have been blamed for the rise, with retail and construction the hardest hit industries nationally.

The BBC carried out analysis of insolvency data across 221 local authorities across the UK, which included Wigan borough. This found 85%, or 187 out of 221, saw a rise in liquidations comparing 2019 to 2022.

Hide Ad
Hide Ad

Liquidation is the process of bringing a business to an end and distributing its assets to the people and businesses it owes money to.

Business liquidations are on the rise in Wigan, new research shows (file picture)Business liquidations are on the rise in Wigan, new research shows (file picture)
Business liquidations are on the rise in Wigan, new research shows (file picture)
Read More
Best places to buy a cooked breakfast

It occurs when a business is classed as insolvent, which can either be when a company cannot afford to pay its bills or its assets are worth less than its net debts.

The research by the BBC focussed on creditors’ voluntary liquidations, which are the most common type of insolvencies. They occur when the company owners have voluntarily placed the business into liquidation rather than waiting for it to be wound up by a creditor.

In the case of Wigan, there were 27 such liquidations in both 2019 and 2020, rising to 34 in 2021, and increasing again to 46 last year.

Hide Ad
Hide Ad

Experts at the time said many of the support packages put in place during the height of the pandemic in 2020 would only help to delay inevitable closures in many cases. Perhaps the most significant measure was the Coronavirus Job Retention Scheme (CJRS) which allowed bosses to claim up to 80 per cent of furloughed employees’ wages.

Liquidations began to rise following the end of the furlough scheme in September 2021.

However experts believe that what have been termed “macro-economic” events in 2022 could be even more damaging in the long run.

Even before the war in Ukraine, inflation was at a record level and businesses were preparing for a six per cent increase in the National Living Wage in 2022.

Hide Ad
Hide Ad

The conflict in Ukraine pushed up the price of both oil and grain, piling on extra costs for businesses from soaring fuel costs to drastically higher energy bills. It has also caused a number of supply chain issues.

Insolvency expert Julie Palmer from Begbies Traynor said: “Obviously, it was a really unusual time because of the pandemic, which sort of kept a very strong guard rail on that cliff edge - the courts were effectively closed for business and businesses were given lots of support to try and get them through the pandemic.

“Some of those businesses have emerged from the pandemic doing well, but for many others trading is very difficult, particularly those that are in consumer-facing sectors.

“There's a lot of nervousness in the economy at the moment due to macro-economic pressures. With interest rates, they are still not high in relative terms, but high in terms of how this generation perceives them, together with inflation that until recently seemed to be galloping out of control.

Hide Ad
Hide Ad

“This has caused a real cost of living crisis, which is really hitting consumer confidence. People are tightening their belts and it's particularly those consumer-facing sectors, that we're really beginning to see struggle at the moment."

Related topics: