A growing number of UK businesses are at risk of going under as costs spiral and Covid loan repayments become due, according to a report from insolvency firm Begbies Traynor.
Despite the lifting of COVID limitations, several businesses are still experiencing supply chain interruptions, and the cost of electricity and other inputs has risen dramatically.
In other industries, hiring is difficult, and labour expenditures, including the minimum wage and national insurance contributions, have increased.
Many UK households are looking for ways to save money as the cost of living rises, putting further pressure on companies that rely on discretionary expenditure, such as bars and restaurants.
According to the survey, the construction and hospitality sectors have been most affected.
Julie Palmer, Partner at Begbies Traynor, said:
‘The government’s finances are themselves taking a hit from the increasing interest environment; they are simply not able to introduce further significant funding into the system, and they now have a choice to make. Do they rush to recover funds handed out during the pandemic to ensure there was a functioning economy afterwards? Or look for ways to control the number of businesses that fail?
‘Having put so much money into protecting businesses over the past two years, ministers won’t want to see it wasted as companies collapse, unable to repay their debts.’
