Increase in UK Businesses filing for Administration

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businesses closing at faster rates in the UK

A total of 879 UK businesses filed for administration in the first six months of 2024 – a 42% and 16% increase compared to 2022 and 2023 respectively, according to analysis by full-service law firm Shakespeare Martineau.

Retail, manufacturing, construction, real estate and hospitality were the worst-hit sectors for the second year in a row, accounting for 57% of all administrations.

Regionally, Greater London led the way with 22% of the filings, followed by the North West (17%) and Yorkshire & The Humber (11%), data from The Gazette Official Public Record has revealed.

While administrations are still yet to hit pre-Covid levels (940 in the first six months of 2019), an insolvency and restructuring expert has warned that more businesses will fail unless the next government controls inflation and gets a grip on rising interest rates.

Andy Taylor, Partner and Head of Restructuring at Shakespeare Martineau, said: “The continued increase in the number of businesses filing for administration is indicative of the prolonged economic challenges that are plaguing the country.

“The data highlights the disproportionate impact on the retail, manufacturing, construction, real estate and hospitality industries in particular, which, together, constitute a substantial proportion of all administrations. Changing consumer buying habits means the retail and hospitality sectors are bearing the brunt, and there has also been a reduction in housebuilding, which has a knock-on effect in the construction and real estate sectors.

“The cost of money, marked by high interest rates throughout 2023, exacerbates financial strains on businesses with models that thrived in a sub-2% interest rate environment. Organisations can only bear that pressure for so long before its sustained impact starts to wash through and they begin running out of cash.

“Moreover, HMRC continues to be more active, with threatened enforcement pushing businesses towards considering their options, and many opting for administration as an alternative to being wound up on a compulsory basis.

Retail Businesses are worst hit sector

The retail industry was the worst-hit sector for the second year running, accounting for 14% of all administrations in the first six months of 2024.

Taylor continued “The sectors most impacted are feeling the effects of higher interest rates and inflation; the money in people’s pockets is now worth less so they are less likely to purchase luxury items and services, which is impacting the retail and hospitality sectors.

“Consumer spending is shrinking and footfall on the high street and in restaurants is declining as a result. The pressure is also on businesses as they face higher borrowing costs and energy expenses, so they are being squeezed from both sides.

“There is still uncertainty in the geopolitical landscape, which is impacting business confidence. With cash flow becoming tight, businesses are at a greater risk of going under. Supply chain issues and the rising cost of importing goods have created a challenging juggling act for businesses to maintain profitability.”

Greater London and the North West remain the regions where most businesses filed for administration. However, Yorkshire & The Humber has overtaken the South East for third place, which sits in fourth this year. The East of England makes up the rest of the top five in 2024.

Taylor concluded “Regionally, the high concentration of filings in Greater London, the North West, and Yorkshire & The Humber reflects the broader economic pressures felt across the country. The shift in regional standings further emphasises the evolving nature of economic stress in different areas.

“Our advice remains consistent – seeking professional advice early can open up more options for struggling businesses. It is crucial not to ignore the signs and bury your head on the sand, and, instead, take a proactive approach to address underlying issues. By doing so, businesses can better navigate the tough trading conditions and increase their chances of survival.”

Businesses filing for administration in the first six months of the year
By sector20232024By region20232024
Agriculture213North West116148
Mining and quarrying46North East3328
Manufacturing91108Yorkshire & The Humber7799
Utilities3642East Midlands5162
Construction85105West Midlands6964
Engineering1811East of England4776
Automotive/transportation3868Greater London192191
Retail118119South East8487
Hospitality7978South West4149
Information & communication4450Scotland2741
Financial3254British Isles20
Real estate5992Wales1625
Professional services2034Northern Ireland49
Administrative2618
Public admin and defence105
Education610
Health and social3238
Arts and entertainment2627
Others331
Total759879Total759879

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