Britain could be ‘hurtling towards a new wave of business insolvencies’ as tariff turmoil and higher taxes batter firms.
Official figures yesterday showed the number of companies going bust rose by 9 per cent to nearly 2,000 last month.
And a report from restructuring firm Begbies Traynor suggested more will soon follow as the number of companies in ‘critical’ financial distress rose by 13 per cent in the first quarter.
Bars and restaurants, plus travel and tourism operators, were among the worst hit, the report said.
Fears over a downturn deepened too after survey figures this week suggesting the economy went into reverse in April.
John Cullen, business recovery partner at advisory Menzies, said: ‘If recession is next in a line of challenges for British business, alongside a heavier tax burden and a decline in investor and lending confidence, we may be hurtling towards a new wave of business insolvencies.’
Increase: Official figures showed the number of companies going bust rose by 9 per cent to nearly 2,000 in March
Firms are being hammered by higher costs imposed by Labour, which has hiked employer National Insurance Contributions and the minimum wage and is introducing a wave of new workers’ rights.
At the same time, they are fearful of the impact of Donald Trump’s trade war both on exports to the US and in creating wider uncertainty that dampens business activity.
The Begbies Traynor report, published yesterday, said the number of firms in ‘critical’ distress climbed to 45,416 in the first quarter of this year, up by more than 5,000 on a year earlier though slightly lower than in the fourth quarter of 2024.
Julie Palmer, partner at Begbies Traynor, said: ‘Optimism remains in short supply for UK businesses.’
She said that while recent official figures showed some positive signs – with data yesterday showing a 0.4 per cent increase in retail sales in March – businesses are worried about looming challenges.
Bars and restaurants have seen a 31 per cent year-on-year increase in firms in critical distress, while travel and tourism operators saw a 25 per cent rise.
‘These sectors are bracing themselves for further economic fallout from both domestic tax increases and US tariffs,’ said Palmer.
The Government’s Insolvency Service yesterday said the number of company insolvencies in March rose by 9 per cent compared with the same month last year, to 1,992, though that was 2 per cent down from the level recorded in February.
Numbers over the past year have been slightly lower than in 2023, when they hit a record high.
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