Company insolvencies leapt by 38% last month in England and Wales as the economic downturn caused more firms to collapse.

Fresh figures from the Insolvency Service showed that 1,948 companies tumbled into insolvency in October, compared with 1,410 over the same month last year.

It also represented a significant lift on the 1,684 insolvencies recorded in September 2022.

The latest jump in insolvencies has been partly driven by a rise in compulsory liquidations.

The data recorded 242 compulsory liquidations in October, which was four times higher than the same month in 2021.

In October, there were also 1,594 creditors’ voluntary liquidations recorded.

Experts said a build-up of debts following the pandemic and weak consumer demand have contributed to the increase in business failures.

Nick Fisher, vice president of insolvency and restructuring trade body R3, said: “A series of economic issues, the end of temporary insolvency legislation, and a lack of a post-Covid bounce have hit all parts of the economy and the supply chain hard, and have resulted in more directors choosing to close their businesses and more creditors calling in debts as a means of balancing their own books.

“The current outlook is tough for many businesses as costs rise and consumer confidence remains low.

“Worries about the price of food and fuel as winter approaches means many people are saving their money ahead of their bills coming in and simply aren’t spending – and a range of businesses, including household names, are struggling as a result.”

It is the latest sign of challenges in the UK economy as separate figures from the Office for National Statistics on Tuesday showed that the rate of unemployment moved higher over the three months to September.