- Hotels, catering and manufacturing firms likely to be hit hard, PwC claims
Nearly 30,000 businesses will go insolvent next year, with smaller firms comprising the lion’s share, new findings warn.
Experts at PwC claim there will be a ‘significant’ rise in businesses collapsing, with companies in the hotels and catering, manufacturing, and transport and storage sectors likely to be hardest hit.
High energy prices, sluggish economic growth and the fallout from higher interest rates look set to take their toll once again next year, the findings added.
Insolvencies: Nearly 30,000 businesses will go insolvent next year, with smaller firms comprising the lion’s share, PwC warns
If PwC’s forecasts prove to be accurate, corporate insolvencies in the UK will reach their highest level since 2004 next year.
Barret Kupelian, chief economist at PwC, said: ‘There is also likely to be quite a lot of zombie businesses, namely those that have been riding the wave of low interest rates for a longer period of time, that are likely to face difficulties as well.’
PwC also suggests consumer prices will remain higher in 2024, despite falls to headline inflation.
It said: ‘Consumer prices will still be around a quarter higher than in early 2021. So consumers will continue to readjust their spending based on their priorities and preferences.’
Earlier this month, data from The Insolvency Service revealed that the number of registered company insolvencies in November was 21 per cent higher than in the same month last year.
Ranald Mitchell, a director at Charwin Private Clients told Newspage this month: ‘The pressure on UK households and businesses is accelerating as high interest rates, the ongoing cost of living crisis, crippling energy prices and inflation continue to wreak havoc in the economy.
‘If the Bank of England plans to break it to make it, they are certainly getting the first part right.’
This month, insolvency practitioners at Begbies Traynor said they expect more businesses to tip into insolvency. The firm said ‘corporate distress levels continue to increase.’
UK inflation fell to 3.9 per cent in November, down from 4.6 per cent the previous month. Economists expected a figure of 4.4 per cent.
The drop, driven by fuel and food price pressures easing, means that inflation is now at the lowest level for more than two years.
The inflation figures from the Office for National Statistics also prompted calls for a rethink from the Bank of England, which has been pushing back against talk that interest rate cuts could come soon.
Financial markets are betting that with inflation in retreat the Bank will start cutting rates in the spring. Goldman Sachs analysts suggest a base rate cut could come as soon as February.
PwC expects headline inflation to continue coming closer to the 2 per cent target next year. While challenges remain and insolvencies look set to increase, it suggests the picture is, in certain respects, looking brighter for 2024.
Kupelian of PwC said: ‘There remain many “known unknowns” in 2024 that can change the trajectory of the UK, such as volatility in global energy prices due to the continued middle eastern conflict and the forthcoming General Election, however, overall the outlook is far rosier for 2024 than expected twelve months ago.’
