Bankruptcies Up 14% as Businesses Struggle with Costs and Interest Rates
More than 25,000 UK companies went bust last year, marking the highest figure in three decades, according to the Insolvency Service. This represents a 14% increase compared to 2022. The surge in bankruptcies can be attributed to rising costs, including energy and wage bills, as well as falling consumer confidence.
Wilko Closure Highlights the Impact of Bankruptcies
Budget homeware chain Wilko, which closed in the autumn, was one of the most high-profile casualties, resulting in the loss of over 12,000 jobs. The closure of Wilko underscores the challenges faced by businesses in the current economic climate.
Voluntary Liquidations Reach Highest Level on Record
In addition to bankruptcies, there was a 9% increase in creditors' voluntary liquidations, reaching 20,577, the highest since records began in 1960. Furthermore, compulsory liquidations nearly doubled compared to 2022, with 2,827 recorded last year.
Businesses Struggling Despite Government Support During the Pandemic
While government support during the pandemic helped save many businesses, the number of companies going bust has been steadily increasing since 2019. In 2022, there were 22,000 bankruptcies, compared to 17,000 five years ago. Last year, the figure reached 25,158, indicating the ongoing challenges faced by businesses.
Uncertain Future for Insolvencies
Nicky Fisher, president of insolvency trade body R3, warns that unless the economic situation improves and consumer spending picks up, insolvency numbers are likely to remain high. However, Julie Palmer, a partner at business rescue firm Begbies Traynor, believes brighter days may be ahead, citing a better-than-expected Christmas and potential interest rate cuts by the Bank of England as sources of comfort for business leaders.
Pets at Home Issues Profit Warning due to Slowing Retail Demand
Vet and pet store chain Pets at Home issued a profit warning, attributing its woes to slowing retail demand. The company, which operates around 450 stores and 440 vets' practices, saw shares drop 3%. Revenue growth slowed from 6.5% in the first half of the year to 4.3% in the third quarter.
Diageo Faces Profits Slump in Latin America and the Caribbean
Drinks giant Diageo reported a slump in profits over the last six months, primarily due to a plunge in demand in Latin America and the Caribbean. The company, known for brands such as Gordon's gin and Johnnie Walker whisky, cited consumers opting for cheaper drinks as a contributing factor. Despite this, its British business experienced a 9% sales boost driven by the high demand for Guinness.
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