The has been a surge in the number of UK insolvencies over the past year, as the current cost of living crisis shows no signs of abating.
The overall increase, according to international audit, tax and advisory firm Mazars is 79% (from 11,949 to 20,512)
The hospitality sector has been hit especially hard, with 216 insolvencies of pubs, bars & restaurants in August, up 37% from 158 in July. Over the past year, insolvencies of pubs, bars and restaurants has increased 59%, from 1,354 to 2,156. Spikes in energy bills seen in the sector are forcing many to consider closure.
Businesses have increasingly struggled to pay their energy bills, which have spiralled since the start of the year. Unlike households, businesses’ energy bills are not capped.
Adam Harris, Partner at Mazars said, “Many UK businesses were already in a weak position before energy prices surged. The size of energy price rises was always likely to cause some businesses to close but the scale and pace of these insolvencies is especially concerning.”
“Small business owners in particular are struggling under the weight of multiple crises, often without the resources or financial cushion to see them through.”
“The hospitality sector is facing an unusually challenging environment as the cost-of-living crisis hits them from both sides. Just as their energy costs are spiral and their interest costs rise their customers are cutting spending on non-essentials such as eating out.”
“The Government’s upcoming energy package will be key to determining whether many businesses survive. Unless the picture dramatically changes, we are likely to see many more businesses close their doors in the months to come.”