{"id":79957,"date":"2023-01-24T00:20:06","date_gmt":"2023-01-24T00:20:06","guid":{"rendered":"https:\/\/tahrir2day.com\/news\/2023\/01\/24\/warning-that-thousands-of-firms-face-collapse\/"},"modified":"2023-01-24T00:20:06","modified_gmt":"2023-01-24T00:20:06","slug":"warning-that-thousands-of-firms-face-collapse","status":"publish","type":"post","link":"https:\/\/tahrir2day.com\/news\/2023\/01\/24\/warning-that-thousands-of-firms-face-collapse\/","title":{"rendered":"Warning that thousands of firms face collapse"},"content":{"rendered":"
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Fears are growing that 2023 could see a spate of corporate failures as the cost-of-living crisis lingers.<\/b><\/p>\n<\/div>\n

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The number of firms on the brink of bankruptcy rose by more than a third late last year, bankruptcy firm Begbies Traynor said.<\/p>\n<\/div>\n

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This number is expected to rise due to higher costs and cuts in consumer spending.<\/p>\n<\/div>\n

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Paul Jones, co-founder of brewery Cloudwater Brew, said the pressure felt like a “never-ending nightmare”.<\/p>\n<\/div>\n

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Julie Palmer, a partner at Begbies Traynor, said they are getting more and more calls from business owners like Mr Jones worried about going ahead.<\/p>\n<\/div>\n

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Mr Jones said his Manchester-based company has been in survival mode since March 2020, with high costs, debt, low consumer confidence and post-Brexit trade woes all weighing on the business. <\/p>\n<\/div>\n

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“The costs for me were pretty grim,” he said. “I have a heart condition from stress and I constantly feel at the limit of what I can personally handle.”<\/p>\n<\/div>\n

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His thoughts are on closing his store “probably once a month since 2020,” he said.<\/p>\n<\/div>\n

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“I feel like it’s either not possible or not worth going on,” he said. “We will continue. What else can we do?” <\/p>\n<\/div>\n

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However, he remains optimistic about business prospects in 2023.<\/p>\n<\/div>\n

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Begbies Traynor said the number of companies in critical financial difficulty rose 36% in the last three months of 2022.<\/p>\n<\/div>\n

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A company is in critical financial distress if it has more than \u00a35,000 in district court judgments or a winding-up petition against it.<\/p>\n<\/div>\n

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The number of district court judgments served against companies during the same period increased by 52% compared to 2021.<\/p>\n<\/div>\n

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  • Energy bill support for companies is to be reduced from April<\/li>\n<\/ul>\n<\/div>\n<\/div>\n
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    Ms Palmer said low interest rates and credit have helped businesses so far. In the pandemic, Covid credit and a longer tax payment time had meant support continued.<\/p>\n<\/div>\n

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    “[The support] everything seems to be ending at the same time, and there’s really nothing on the horizon to replace them,” she said.<\/p>\n<\/div>\n

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    A backlog in bankruptcy courts over Covid has also delayed some company failures.<\/p>\n<\/div>\n

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    “Courts were closed to business so no one could take recovery action against non-payers and we are seeing those cases being enforced now,” she said.<\/p>\n<\/div>\n

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    This cocktail of challenges has already proven deadly for some. <\/p>\n<\/div>\n

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    Chef Mary-Ellen McTague founded a restaurant The Creameries in Manchester in 2018. It received rave reviews and traded well until the pandemic hit the following year and business never fully recovered.<\/p>\n<\/div>\n

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    High energy costs were the last straw. She had to close the restaurant in September last year. <\/p>\n<\/div>\n

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    “It became obvious that no matter how hard I worked, how hard I tried, how many different tactics we tried to reverse it, we were just never going to get enough customers through the door for it to work. And that was a terrible moment,” said Ms McTague.<\/p>\n<\/div>\n

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    She said running a business at such a difficult time took a tremendous emotional toll. <\/p>\n<\/div>\n

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    “I think it can be a really lonely experience to be in that position,” she said. <\/p>\n<\/div>\n

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    \u201cWhen you are the leader of a small business, you have close relationships with your employees, your suppliers. And you don’t want to upset anyone, so don’t necessarily talk about it with your friends, family or even your significant other,” she added.<\/p>\n<\/div>\n

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    “You don’t want to upset your children. There is a lot of trying to keep the worries away from others, which means you carry them within you. <\/p>\n<\/div>\n

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    “There’s still a lot of stigma and that sense of shame that things aren’t working out, even if it’s completely out of your hands.”<\/p>\n<\/div>\n

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    She admitted she had mixed feelings when she finally had to close the shop <\/p>\n<\/div>\n

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    “When you get to the point where you see what’s going on and you can’t do better, there’s definitely a sense of relief afterwards.”<\/p>\n<\/div>\n

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    NatWest boss Alison Rose said that while Britain’s largest corporate lender has yet to see widespread corporate failures, she is concerned that companies are not, or not confident enough, about investing in the future. <\/p>\n<\/div>\n

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    \u201cThanks to very low business confidence, we see very little investment. This is a real concern for me because it will hamper future growth.\u201d<\/p>\n<\/div>\n

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    But there is also reason for optimism in 2023, she said.<\/p>\n<\/div>\n

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    “If you think we’ve had a global pandemic, the end of low interest rates, a war in Europe, massive price hikes – what we’ve seen is incredible resilience in the UK business,” she said.<\/p>\n<\/div>\n

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    \u201cWe also have full employment, which is really positive. We are seeing a record number of startups and banks like ours in a strong position to support clients. So it’s a tough environment, but we should never forget how resilient the business owners were.”<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Fears are growing that 2023 could see a spate of corporate failures as the cost-of-living crisis lingers. The number of firms on the brink of bankruptcy rose by more than a third late last year, bankruptcy firm Begbies Traynor said. This number is expected to rise due to higher costs and cuts in consumer spending. 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