Business failing in the UK last year increased from 857 in 2021 to 1340, research from law firm Shakespeare Martineau has found.
Firms generally faced a tough year, with energy prices soaring due to the Ukrainian war and labour and raw material costs rising.
Despite fears of a recession, a cost-of-living crisis and decreased consumer spending the number of bankruptcies remained 25% lower than in 2019 when Covid led to 1794 businesses failing, Shakespeare Martineau noted.
“Numerous headwinds have become a new normal at this point and businesses are being pulled from every direction,” said Andy Taylor, partner at the British law firm.
“Furthermore, pressure from lenders is increasing and HMRC is taking a firmer stance, seeking to cap levels of liability for non-payment of tax.”
Geographically, close to 20% (265) of the business closures occurred in greater London, followed closely by 16% (213) in the southeast.
Businesses in Northern Ireland and Wales appeared to fare the best, combined the two countries made up only 5% of total closures, Shakespeare Martineau added.
Graph showing the number of bankruptcies over the last few years Source: Shakespeare Martineau
Of the bankrupt companies, 208 of these were in the construction sector, making up 15% of all administrations last year.
Other sectors that struggled include:
- Manufacturing (174)
- Retail (138)
- Real Estate (95)
- Professional services (90)
- Food and Drink (87)
The report comes after research by CGA found 4.5% of hospitality sites had shut down in the 12 months to December 2022.
In the fourth quarter last year 1,611 licensed premises shut, with 1,410 being independently owned, CGA said.
“Looking forward, we expect to see an increase in businesses failures as they battle tough trading conditions. However, resilient businesses with a strong balance sheet may well find opportunities for growth as we head further into 2023,” Taylor concluded.