BUSINESS
Research from law firm Shakespeare Martineau shows a 22% increase in UK businesses falling into administration compared to last year.
According to the research, a total of 759 UK businesses filed for administration in the first six months of 2023 – a 22% increase compared to 2022.
Among the worst-hit sectors were retail, manufacturing and hospitality. Greater London remains the region where most businesses filed for administration. However, the North West overtook the South East for second place, and the West Midlands replaced the East of England in the top five.
An insolvency and restructuring expert has warned that more businesses will fail unless inflation is controlled and interest rates stop being increased.
Andy Taylor, Shakespeare Martineau's partner and head of restructuring said: “Given the prolonged economic uncertainty that is plaguing the country, the increase in the number of businesses filing for administration is no surprise.
“We’re seeing a steady flow of corporate failures. Should some other ‘bad news’ rear its head, then that is only likely to increase. Businesses and individuals need to see interest rates and inflation come down. With a period of stability, we will see confidence increase.
“The sectors most impacted are feeling the effects of higher interest rates and inflation; the money in people’s pockets is now worth less so they are less likely to purchase none essential items and services, which is impacting the retail and hospitality sectors.
“Consumer spending is shrinking and footfall on the high street and in restaurants is declining as a result. The pressure is also on businesses as they face higher borrowing costs and energy expenses, so they are being squeezed from both sides."
Andy added: “Our advice remains consistent – seeking professional advice early can open up more options for struggling businesses. It is crucial not to ignore the signs and bury your head in the sand, and, instead, take a proactive approach to address underlying issues. By doing so, businesses can better navigate the tough trading conditions and increase their chances of survival.”
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