Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Warning that thousands of firms face collapse

Warning that thousands of firms face collapse

There are growing fears that 2023 could see a wave of company collapses as the cost of living crisis continues.

The number of firms on the brink of going bust jumped by more than a third at the end of last year, said insolvency firm Begbies Traynor.

It expects this number to rise due to higher costs and consumers cutting back their spending.

Paul Jones, co-founder of brewery Cloudwater Brew, said the pressure felt like a "never-ending nightmare".

Julie Palmer, partner at Begbies Traynor, said it was receiving an increasing number of calls from businesses owners like Mr Jones who were concerned over whether they could carry on.


'Survival mode'
Paul Jones says he feels like continuing his business is either not possible or not worth it


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 trading problems all bearing down on the business.

"The cost to me has been pretty bleak," he said. "I have a heart condition from stress and I feel constantly on the edge of what I can personally cope with."

His thoughts have turned to closing his business "probably once a month since 2020," he said.

"I feel like continuing is either not possible or not worth it," he said. "We're going to keep going. What else can we do?"

But he remains downbeat about business prospects in 2023.


Financial distress


Begbies Traynor said the number of companies in critical financial distress jumped by 36% in the last three months of 2022.

A firm is in critical financial distress if it has more than £5,000 in country court judgments or a winding up petition against it.

The number of county court judgments served against companies in the same period jumped by 52% compared with 2021.

Ms Palmer said that up until now low interest rates and loans had helped firms. In the pandemic, Covid loans and a longer time to pay taxes had meant that support had continued.

"[The support] all seems to be coming to an end at the same time, with nothing really on the horizon in terms of what might replace them," she said.

A backlog in the insolvency courts due to Covid has also delayed some company collapses.

"The courts were closed for business so nobody could take recovery action against non-payers and we are beginning to see those cases pushed through now," she said.

Chef Mary-Ellen McTague had to close her restaurant last year


This cocktail of challenges has already proved lethal for some.

Chef Mary-Ellen McTague set up a restaurant The Creameries in Manchester back in 2018. It received rave reviews and was trading well until the pandemic hit the following year, and the business never fully recovered.

High energy costs were the final straw. She had to close the restaurant in September last year.

"It became apparent that no matter how hard I worked, how hard I tried, how many different tactics we tried to turn it around, we were just never going to get enough customers through the door to make it work. And that was a horrible moment," said Ms McTague.

She said running a business during such a difficult period took a huge emotional toll.

"I think it can be a really lonely experience being in that position," she said.

"If you are the head of a small business, you've got close relationships with your staff, your suppliers. And you don't want to worry anyone, so you don't necessarily talk to your friends, family, or even your partner about it," she added.

"You don't want to worry your children. There's a lot of trying to keep the worry from others, which means you hold it in yourself.

"There's still quite a lot of stigma around it, and feeling this sense of shame of things not working out, even when it's completely out of your hands."

She admitted that she had mixed feelings when she finally had to close the business

"Once you're at the point where you can see what's going on and you can't make it better, there is definitely a sense of relief afterwards."


'Little investment'


NatWest boss Alison Rose said that while the UK's biggest business lender is yet to see widespread company failures she is concerned that firms are unable or not confident enough to invest for the future.

"We are seeing very little investment thanks to very low business confidence. That for me is a real concern because it will affect future growth."

But there were still reasons for optimism in 2023, she said.

"If you think we have had a global pandemic, the end of low interest rates, a war in Europe, massive price rises - what we have seen is incredible resilience in UK business," she said.

"We are also at full employment which is really positive. We are seeing record number of start-ups and banks like ours that is in a strong position to support customers. So it is a tough environment, but we should never forget how resilient business owners have been."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
×