Surging interest rates are set to eliminate all of the UK’s “zombie” companies over the next 18 months, according to a new forecast. The prediction comes as insolvencies in England and Wales have reached a 14-year high amid rising energy bills, interest rates and labour costs, as well as falling consumer confidence.
With levels of distress continuing to rise, insolvency practitioner Begbies Traynor has said that rising interest rates will wipe out essentially all of the UK companies struggling with unmanageable debts by the end of 2024.
Speaking to Bloomberg, Begbies Traynor Chief Executive Ric Traynor said: “Over the next 18 months, we’ll see virtually all of them finally come to an end.”
Concerns around “zombie” companies – businesses that have managed to avoid insolvency despite struggling to service their debts – have been mounting since the COVID-19 pandemic, when government-backed loans helped to prop up thousands of UK businesses. Combined with limitations imposed on creditor actions such as winding-up petitions, this saw insolvency rates plummet despite the economic chaos caused by the pandemic.
However, these protections have since been withdrawn and businesses are now faced with having to pay back debts in an increasingly hostile trading environment, with inflation soaring, costs rising across the board, supply chain issues persisting and the cost of living crisis pushing consumer sentiment and spending down.
Amidst all of this, Begbies Traynor – which is reported to have an 11 per cent share of the UK administrations market – has seen double-digit annual revenue and profit growth following soaring demand for insolvency services.
Ric Traynor added: “Our insolvency team will benefit from their recent insolvency appointments and increased order book, together with anticipated further growth in the insolvency market.”
“We’ve seen an increase in activity for smaller companies over the last year because they tend to be the first ones that are hit when there’s a problem. We’re now moving into mid-market companies.”
An opportunity exists to purchase the entire trading businesses and assets of an independent provider of powered access equipment hire and material handling equipment hire, the Companies specialise in the short term hire of Access Equipment, Forklift...
An opportunity exists to purchase the business and assets of a haulage subcontractor specialising in the movement of chilled fruit and vegetable products. The company typically collects loads from the Port of Dover and undertakes UK deliveries on beh...
A profitable and well-established engineering business dedicated to delivering exceptional precision parts with unparalleled quality. Specialising in complex, high-tolerance components, this company caters to a wide range of industries, including las...
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.