The number of companies that entered insolvency rose 10 per cent in 2018, the highest level since 2014, according to official insolvency statistics.
Data, published by the UK government today (January 29), revealed 16,090 companies entered insolvency in 2018 and 3,949 of those took place in the fourth quarter of 2018.
When compared with figures for the third quarter of the year, insolvencies rose by 9.3 per cent in the final three months of 2018.
The construction industry was the worst affected, with 2,954 company insolvencies for 2018.
Financial and insurance sectors, however, had less than 500 insolvencies during 2018.
Brian Johnson, business recovery and insolvency partner at H W Fisher & Company, said: "The reality of Brexit, and the economic uncertainty caused by it, is beginning to bite.
"That much is clear from the latest insolvency figures. Until there is a greater certainty about Britain's future, businesses and households will continue to suffer.
"Large companies are withholding investment decisions, which is already having a significant detrimental impact on smaller companies further down the supply chain.
"There is plenty of evidence of this happening in both the retail and construction sectors.
"Moreover, a lot of larger retailers and construction firms are stretching payment terms to the limit, heaping even more pressure on their suppliers.
"A disorderly Brexit will only exacerbate these issues meaning more companies are bound to go to the wall."
Company voluntary arrangements also soared in 2018, up 16 per cent when compared with 2017 data.
Mr Johnson said the increase of CVAs is a significant concern, likely to have been driven by the retail sector, which succumbed to reduced consumer spending and internet shopping, as well as a rise in interest rates and minimum wage.
He added: "Meanwhile, the rise in compulsory insolvencies of companies of 11.1 per cent in 2018 compared with a year earlier highlights just how many companies were on life support throughout the last couple of years.
"The Zombie companies, so often spoken about over the last few years, are now being washed out of the economic system."
The number of individual insolvencies also soared in 2018, reaching the highest level since 2011.
According to the data, there were 115,299 last year, a 16.2 per cent rise on 2017. The final quarter of 2018 recorded 34,108 individual insolvencies in England and Wales, up 35 per cent on the previous quarter.
Mr Johnson claimed this is just as worrying, demonstrating the significant pressures facing households.
He said: "That pressure has already has a significant impact on consumer spending habits which is one of the reasons why retailers have suffered so greatly in the past year.
"Given the level of household indebtedness any increase in interest rates in the near term is likely to push these insolvency figures through the roof."
Jenny Turton is a freelance journalist
