Proactive Investors - A record number of companies were in “significant financial distress” over the third quarter of this year ahead of feared tax hikes in the upcoming Autumn Budget.
Some 632,756 firms were said to be fighting for survival in the third quarter, marking a 32% against the same period a year earlier, according to restructuring firm Begbies Traynor (LON:BEG).
This came as a 19.3% increase in “significant” distress was seen across utilities over the quarter, followed by a 10.4% uptick among food and drug retailers, 9.9% for financial services and 8.7% in the bar and restaurant sector.
Those in “critical” financial distress fell over the quarter meanwhile, by 17%, signalling fewer firms were on the verge of insolvency.
“No section of the country’s economy is immune from the legacy debt built up by many businesses during the pandemic,” Begbies Traynor partner Julie Palmer said.
“It is also apparent that the toxic effect of high inflation is still filtering down to businesses.”
She added high material and labour costs had hit the construction sector particularly hard, leaving the trend likely to continue and feed through to sub-contractors.
“For some, the prospect of a change of government was viewed as a potential catalyst for a much-needed economic boost,” Palmer continued.
“But, there are significant concerns surrounding what the next Budget might hold for the economy and the knock-on effect could be damaging for many businesses teetering on the edge of collapse, as it seems certain many will have to deal with higher employee-related taxes.”