Corporate rescue practitioners Begbies Traynor is warning that companies across the UK economy are feeling the squeeze to a greater extent than before with a 20% increase in businesses in distress in the first quarter of 2022.
The company says that its data shows 1,891 companies in critical financial distress, 19% more than at the same period last year. And while Begbies Traynor says that the increase is driven by a 51% jump in the construction sector and a 42% leap in bars and restaurants, print too has been hit.
According to the London Gazette, more than 50 print companies have entered administration or have been liquidated in the first four months of this year. The casualties have been led by the YM Group, but also include long established Abbey Print of Bradford, Indigo Press, Southampton, Your Print Partner, Creative Print UK, Cranden Press, TG Print and more.
As the squeeze on consumer spending starts to bite with inflation and a rise in energy costs, the fitness sector is bracing for hard times and organisations promoting health and fitness are warning of a loss in leisure facilities. Local authorities may be forced to close swimming pools because the cost of heating the water becomes too great. And gyms and health clubs could become victims as consumers cut discretionary spending.
Begbies Traynor points to an improvement in the data on companies in ‘significant’ financial distress, which at 581,596 is 20% improvement on a year ago. However, county court judgements, a sign of future problems, have risen 157% to 22,552, with March showing the highest number for five years. Not all this increase will be because of a backlog caused by the pandemic.
Julie Palmer, regional managing partner at Begbies Traynor, says the signs are that a wave of company closures is on the way. “The critical distress and CCJ data are likely predictors of a wave of insolvencies coming. It’s just a case of when the dam holding it back finally bursts. The latest insolvency figures for March reinforce this worrying trend with creditors voluntary liquidations – the most common type of corporate insolvency – more than doubling compared to March 2021 and up 62% compared to March 2019.
”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.”
