According to the latest figures from the Insolvency Service, 25,551 companies went under in the year leading up to the end of July, a 1.4% increase compared to the 25,186 insolvencies recorded during the same period in 2008-09. These figures highlight the mounting pressure on businesses as a result of the sharp rise in interest rates since 2021.
Rebecca Dacre, a partner at Forvis Mazars, commented on the situation, saying, 'The latest insolvency figures are a strong reminder that many businesses are still a long way off from recovery. Despite initial signs of improvement in the economy, some sectors are still experiencing severe difficulty as interest rates remain high.'
In response to the economic challenges, the Bank of England lowered interest rates this month for the first time since March 2020, reducing its base rate from 5.25% to 5%. City traders anticipate that the Bank will implement two further rate cuts this year, each by a quarter-point.
The retail and hospitality sectors, in particular, have been hit hard by reduced consumer spending during the ongoing cost of living crisis. These challenges have made survival increasingly difficult for many businesses in these industries.
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