Two years of trading anxiety, financial stress and post-pandemic uncertainty has left many British businesses, including retailers and fashion companies, at a risk of insolvency.
Many companies took out loans when their companies were forced to close during Covid-19 restrictions and lockdowns, but are struggling to repay debts.
A report by Begbies Traynor published earlier this year paints a worrying picture for UK businesses with increasing numbers falling victim to pressures which have been building since coronavirus began piling up problems in the economy almost two years ago.
The latest data indicates that the debt storm which has been brewing for years, but had been held off by measures to provide breathing space for companies, could now be about to hit, sending shockwaves through many industries.
Julie Palmer, partner at Begbies Traynor, said: “Businesses that have bravely battled through the pandemic could now start to fail as the pressures they face become too much.
“Support from the Government such as furlough payments, tax reliefs and a moratorium on landlords being able to evict businesses due to rent arrears cannot go on forever.
“Without these measures in place to protect them, a rising number of companies will have no other option but to relinquish their business after two years of struggling on in the economic uncertainty that has been tempered by measures to combat the impact of coronavirus. “The lag effect of the economic fallout from Covid, plus significantly higher inflation, has created a perfect economic storm for many companies, particularly the UK’s SME sector, which will undoubtedly drive insolvency rates even higher.”
Data from Begbies Traynor shows 589,168 UK businesses reported significant financial distress during final quarter of 2021, a 5 percent rise on the previous three months.
Article source: Begbies Traynor