Richard Oddy, a partner, licensed insolvency practitioner and business restructuring, turnaround and rescue expert at international accountancy and business advisory group Azets in Yorkshire, said:
“The biggest driver of the increase in corporate insolvencies has been liquidations, which shows there are more businesses who have either gone beyond the point of rescue or whose management teams simply don’t have the fight or the funds left in them to try and turn things around.
“Many directors have been trying to hang on since the end of the pandemic, and it would appear that an increasing number have run out of road in a trading climate that has been tough for as long as anyone can remember and which shows no sign of improving in the short-term.
“To put it simply, five years of economic and geopolitical uncertainty is continuing to drive insolvencies. Businesses face a continuing storm of rising costs, constrained spending and increased creditor pressure – as well as the looming Budget.
“As firms across the UK take every possible step to manage their own outgoings, creditors of every shape and size are now taking every possible step to chase down debt, with HMRC leading the way in its quest to recover money for the Treasury.
“This has added another layer of pressure on businesses at a time when profits have shrunk and expenses have soared, and has resulted in more firms seeking advice and support.
“Construction, retail and hospitality are the industries that have been hardest hit as increased costs, eroded margins, and cautious consumer and client spending have hit them particularly hard. Both sectors have seen prices of materials and stock soar, and the increases in National Minimum Wage and Employer NI will have resulted in salary reviews right across the sector and across the UK, rather than just for those on the lowest wages.
“We’ve seen more insolvencies this year than with had by this time last October, and it’s highly likely numbers will increase in the run up to Christmas.
“With economic growth sluggish, unemployment increasing and many firms struggling to break even – let alone grow – the prospect of a future recession is a real and serious one, and one which will cause further problems for businesses across the country.
“The eyes of the Yorkshire business community will be on the Chancellor at the Budget at the end of this month as directors hope she doesn’t introduce anything that adds to their already heavy cost burdens and that may lead to more firms facing insolvency.
“Firms in the service sectors are visibly worried about the potential impact tax increases will have on discretionary spending, footfall and revenue – and will be hoping any ripple effect from this doesn’t deal them another blow at a time when many are struggling to keep their heads above water.“
Richard, who is based in Azets’ Leeds office, added: “Our message to worried directors in Yorkshire is a simple one: pick up the phone.
“We know how hard it is to talk about your business’s problems, but having the conversation with an expert when they’re just beginning gives you more potential solutions, more time to take a decision about how you move forward and a better likelihood of you being able to turn things around than if you’d it off until things became more serious. Don’t wait until it’s too late.”
Azets has three offices in Yorkshire, in Leeds, Bradford and York, where it employs 335 people.
Image provided by Azets
