The number of companies that entered bankruptcy proceedings increased in January compared to the same month last year, according to official figures.
Total business insolvencies in England and Wales reached 1,671 in the first month of 2023, the Insolvency Service said.
It represented a 7% increase from January 2022 and was 11% above pre-pandemic 2020 levels.
Experts said the rise pointed to higher borrowing costs and continued high levels of inflation for businesses.
However, the data showed a decrease in insolvencies compared to December, when 1,964 companies declared insolvency.
The Bankruptcy Service registered 189 forced liquidations in January, with a year-on-year increase of 52%.
Mandatory liquidations have been lifted in recent months partly as a result of increased requests for HMRC liquidation.
Most of the insolvencies were creditor voluntary liquidations, which rose 2% to 1,382 in the month.
An HMRC spokesperson said: “We take a supportive approach to dealing with clients who have tax debts and only file settlement petitions once we have exhausted all other options, to protect taxpayers’ money.”
Ed Macnamara, head of restructuring at PwC, said: “While the number of company insolvencies in January is lower than the previous month, any respite is likely to be short-lived.
“The data, showing a 7% increase over the prior year, serves as a reminder that we are still in the midst of a difficult business environment with rising interest rates and high inflation that, when combined, typically result in more business bankruptcies.
“We are also seeing an uptick in both late payments and the number of requests to extend credit terms.
“This ripple effect is likely to increase pressure on companies already struggling with their debts and could mean some are forced to file for insolvency.”