THE CHRISTMAS period could be “make or break” for many businesses including hospitality and retail, a trade body boss has warned.

It comes after a “perfect storm" of economic issues led to the highest third quarter (Q3) of corporate insolvency figures in more than two decades.

Garry Lee, regional chair of the UK’s insolvency and restructuring trade body R3, said: “Trading conditions are tough right now. People are worried about money and reluctant to spend on anything other than the basics – and even then, are looking for the best deal possible – while costs are rising and the economy remains turbulent.

“The Christmas period is a crucial time for a large number of businesses – and this year could be make or break for many, especially those in retail and hospitality.

“It remains to be seen whether this year’s Christmas trading period will be the shot in the arm or the final blow for those that are struggling, and we may see a surge in insolvencies in the New Year if it’s the latter.”

R3 said the rise in third quarter insolvencies is due to the rise in Creditors' Voluntary Liquidations (CVLs), which have reached their second highest figure on record and the highest number ever recorded in Q3.

Other factors include growing costs, rising inflation, higher interest rates increased creditor pressure, requests for higher wages and director fatigue.

Mr Lee said: “A perfect storm of economic issues has led to the highest Q3 corporate insolvency figures in more than two decades."

He added: “After years of battling through the pandemic, supply chain issues, increasing costs, rising inflation and requests for higher wages, many directors have simply had enough and are calling it a day while that choice is still theirs."

Insolvency Service figures show there were 6,208 seasonally adjusted corporate insolvencies in Q3 2023, a drop of 1.8 per cent compared to Q2 2023's figures of 6,319 and a 10.2 per cent increase compared to Q3 2022 (5,635).

This year's third quarter figures were also 54.8 per cent higher than Q3 2021’s figure of 4,010 and 41.3 per cent higher than pre-pandemic levels in 2019 (4,393).

However, the number of personal insolvencies decreased by 15.4 per cent on the same period in 2022, due to a fall in Individual Voluntary Arrangement (IVA) numbers.