February 2025 comments
Stats released today by The Insolvency Service unveiled a 3% upturn in company insolvencies in February compared to the month before, but 7% lower than in February 2024.
According to Giuseppe Parla, Business Recovery Director at Menzies, recent GDP figures indicate that British businesses may be in for a bumpy ride ahead:
“January delivered a fatal blow to a wave of British businesses, and February has followed suit with a further increase in company insolvencies. With changes to tax rates coming next month, businesses face lower returns on sales and less disposable funds, and we may well be heading towards yet more collapses.
And with the recent fall in economic growth, all eyes are now on the Bank of England’s base rate review and the Spring Forecast, in a bid to provide businesses with much needed stability, and to finally see green shoots of recovery.
Whether you are struggling with sales, or finding it difficult to recover your debts, our advice is to act early when cashflow constraints ensue. Seek advice to ensure that more options are available for you to secure a profitable future and remain trading.”
January 2025 comments
Stats released recently by The Insolvency Service unveiled a 6% increase in company insolvencies in the year ending January 2025, compared to the month before, and 11% more than in January 2024, as the dust begins to settle following a disruptive Autumn Budget for business.
According to Giuseppe Parla, December stats bucked the trend, and a January hike in corporate insolvencies may have laid the foundations for a tough year ahead:
“While December figures painted a picture of economic stability, January delivered a new wave of corporate insolvencies as British business continues to be hit hard. Despite a recession ‘near-miss’, many businesses are cutting their losses with prices rising 2.5% in the 12 months preceding December, alongside a heavier tax burden. And for businesses looking to cover costs through an exit, previous increases to business asset disposal relief (BADR) and capital gains tax (CGT) hikes will mean reduced asset values and higher tax liabilities – meaning lower returns and less disposable funds.”
Giuseppe continues, stating British businesses are in need of more support: “Cuts to the bank base rate however may provide a lifeline for many businesses calling out for affordable borrowing. But for many, this could be the final straw in the pursuit of business continuity. All eyes now turn to the Treasury: will the Spring Forecast deliver further hope for growth or a return to doom and gloom for British business?”
December 2024 comments
In December, the Insolvency Service released statistics which revealed a 6% decline in company insolvencies in December 2024 compared to November 2024, which is 14% lower than December 2023. This is due to businesses beginning to adapt to an increased post-budget tax burden. This offers a glimmer of hope for businesses, who are hopeful that 2025 will see a further decline in company insolvencies.
A Year of Economic Uncertainty
2024 was a year of financial uncertainty, with two separate Governments searching for the golden ticket to achieve economic growth. Reduced business confidence was the result of this uncertainty, as well as a high base rate and an enhanced tax burden for businesses.
While the December statistics suggest a sense of economic stability, businesses will likely resist the trend. The New Year is expected to follow the same trend, with continued hikes in the cost of hiring and retaining staff, further strained by the changes to employers NIC contributions leading many businesses into financial hardship. Furthermore, for businesses looking to cover costs through an exit, increases to business asset disposal relief (BADR) and capital gains tax (CGT) will result in reduced asset values and higher tax liabilities, which leads to lower returns and less disposable income.
Opportunities Amid Reduced Competition
The reduced market competition could provide a competitive advantage for some. However, where there is a lack of stability or uncertainty in the economy, companies who have strong foundations are presented with opportunity to grow. But on the other hand, those companies with a shorter foresight are going to begin to fall.
As ever, our message to businesses would be to act early If they anticipate financial trouble. By acknowledging the potential trouble early on ensures that more options are available and as a result, secures a profitable future and enables businesses to remain trading.
Please do get in touch
If you have any questions, please do get in contact via the contact form below:
Contact Our Experts
