Nearly 50,000 UK firms on brink of collapse after two years of rising interest rates
MORE than 47,000 UK firms are on the brink of collapse, a shock new report has claimed.
Two years of interest rate rises have left many companies facing a debt storm, say insolvency specialists Begbies Traynor.
It found the number of at-risk firms climbed by 25 per cent in 2023’s final quarter.
And 539,900 businesses were deemed to be in “significant financial distress”.
That is up 13 per cent on the previous quarter, and six per cent higher year-on-year.
Begbies’ Julie Palmer said: “Hundreds of thousands of businesses who loaded up on affordable debt, are now coming to terms with the added burden this will have.”
All 22 sectors assessed by the business saw an increase in critical financial distress.
Construction and real estate were among the hardest hit, with increases of a third and a quarter respectively.
Both were hit by the onslaught of interest rate rises over the past two years which has affected the housing market.
Begbies added: “Serious concerns grow over the construction and real estate sectors, which still represent nearly 30 per cent of all businesses in critical financial distress.”
Last week housebuilder Crest Nicholson issued another profit warning after being hit by a summer slowdown — driven by higher mortgage rates and fewer homes for sale.
Builders’ merchant Travis Perkins warned it will make further jobs cuts as it tries to make cost cuts of £35million.
Builder Persimmon said it sold a third fewer homes last year.
And Taylor Wimpey reported about a quarter fewer completions year-on-year.
by Simon Read
CRIME MENACE HEALTH THREAT
MORE than nine in ten tradespeople have been targeted by criminals in the past year, insurer NFU Mutual warned.
Half had materials pinched, a third had a vehicle stolen and a quarter said they had become victims of organised crime.
Almost one in three said that the fear of theft and violence had affected their mental health.
Texts to a construction charity helpline more than doubled in the last three months of 2023.
NFU said: “Tradespeople rely on their equipment and crime has a huge and negative impact on their mental health.”
FORTUNE & MASON
UPMARKET food shop Fortnum & Mason said profits climbed in the year to 31 July 2023 after it opened a gin distillery and cocktail bar at its flagship Piccadilly store in London.
But the 317-year-old business warned of “challenging operating conditions” and “wider economic headwinds”.
Despite higher costs, profits still grew by 23 per cent to £7.5million it said.
Sales at Piccadilly and London’s Royal Exchange and Heathrow Airport grew by 34 per cent. The biggest boost was from higher sales of its wicker-basket hampers.
CEO Tom Athron said the firm plans to invest £9million in the business this year.
POPEYES ON RISE
US chicken chain Popeyes plans to almost double its UK stores in the next year which will create about 2,000 jobs.
Best known for its fried chicken sandwiches, the firm is looking at new sites including in Birmingham, Aberdeen and Swansea.
It opened in the UK in 2021 and now has 36 branches, employing 2,300 people.
This week the company will open outlets in Ilford and Hammersmith in London.
Popeyes said: “We’re excited to be giving more people their first taste of New Orleans.”
VIRGIN WINES sales climbed two per cent in the past six months despite a “subdued” economic backdrop for shoppers.
The firm posted a £700,000 loss in the previous year but has revamped its warehouse operations and cut delivery costs.
EVRI DELIVERING
DELIVERY firm EVRI, formerly Hermes, said it delivered a record 150million parcels over the festive period.
It said there was a 21 per cent spike in deliveries in the final Christmas week as bargain-hunting consumers left shopping late.
Its success was a contrast to 2022’s Christmas, when the firm had to apologise after people complained of significant delays or not receiving their packages.
It has since invested £32million in operations and customer service and hired 6,500 extra staff to handle orders.
COMPASS GOBBLES CATERER
THE world’s largest food services firm Compass Group has splashed out £475million on Ch&Co, which provides hospitality for venues such as Kew Gardens and the Royal Opera House.
It operates catering services across sectors including sport and leisure, education and culture including the Royal Academy of Arts, the Southbank Centre and the Old Royal Naval College.
The Reading-based firm owns businesses including Gather & Gather, Vacherin and Company Of Cooks and has 10,000 workers who will all become part of Compass.
The British catering giant already employs about 550,000 people.
Boss Dominic Blakemore said: “This proposed acquisition combines our shared passion for people, great food, and focus on sustainability.”
FIRM BET ON £2.3BN
UNIBET and 32Red owner Kindred Group is being taken over by French and Irish lotteries owner La Française Des Jeux in a £2.3billion deal.
Sweden-listed gambling firm Kindred has told shareholders to accept the value for its shares, which were 25 per cent higher than at Friday’s close.
Kindred offers online gambling services in Europe, North America and Australia to more than 30million customers through nine different brands.