Freddy Khalastchi, Restructuring & Insolvency Partner at Menzies LLP, warns that the pressures facing high street and leisure operators are now increasingly structural, rather than simply seasonal:

“Hospitality, retail and leisure businesses had hoped for a stronger start to the year, yet many continue to grapple with rising costs, subdued consumer spending and increasingly limited headroom within already thin operating margins.

Hospitality, leisure, property and construction businesses tend to feel the strain most acutely at this time of year, as winter weather and shorter daylight hours dampen activity and delay projects. Retailers, meanwhile, are often forced into heavy discounting to clear unsold Christmas stock, as fragile demand and persistent cost inflation further erode profitability.

The latest insolvency figures underline that these challenges extend well beyond a typical post-Christmas slowdown. Instead, they point to deeper pressures that continue to test the resilience of the UK’s consumer-facing sectors and may require urgent policy attention.”

Khalastchi adds that while the recently announced pub rescue package offers some targeted relief, broader support remains limited:

“Aside from limited relief for pubs – many of which have already closed their doors in recent years – there has been little meaningful government support for other struggling sectors. With food, drink and raw material costs still rising, the full impact of the increase in Employer’s National Insurance now being felt. This, coupled with another uplift in the National Minimum Wage, due within months, means that preserving working capital has now become critical.

For many businesses, survival will depend on holding their nerve until the spring, when expected interest rate cuts may help revive consumer spending and ease financial pressures. Those that act early and seek professional advice will retain the widest range of options – and the best chance of navigating what remains a highly challenging trading landscape.”

According to Giuseppe Parla, Restructuring and Insolvency Director at Menzies LLP,

“While it is encouraging to see insolvency numbers ease slightly, retail and hospitality traders are far from feeling festive cheer. Many were hoping the delayed budget would deliver the early Christmas presentthey needed, but higher costs are still filtering through as reliefs are withdrawn and business rates begin to rise. These pressures continue to squeeze margins and test the resilience of high-street businesses. We’re still seeing financial strain across the sector, with well-known names including Leon, River Island, Poundland and TGI Fridays announcing closures, restructurings or financial pressures in recent weeks.

Another positive is that borrowing costs have begun to ease, with rates now at their lowest level in almost three years. This should give retail and hospitality businesses more flexibility and financial options as they plan their next steps going into the New Year.

But the cold reality is that higher employment costs, slowing wage growth and fragile consumer confidence remain major challenges. With Black Friday card spending down, there are growing concerns that households may be holding back in the run-up to Christmas.

Seeking help is a difficult conversation to have. But, as ever, our message to businesses is clear: please act early if you anticipate financial trouble. Doing so ensures that more options are available for you to address business issues, to secure a profitable future and remain trading.”