The Chancellor’s Autumn Budget will have “implications” for businesses and will cause cost pressures, insolvency experts are warning.
Restructuring chiefs have warned that the government’s cost increases in the minimum wage and national insurance contributions will prove tough in 2025 for retail and the hospitality industry.
During November 2024 there was an increase of insolvencies by 13% compared to the month before, according to the Office for National Statistics.
In the run up to the new year insolvency expert have seen a rise of enquiries and Homebase was one of many firms to fall into administration last month.
Nicky Fisher, of R3, the UK’s insolvency and restructuring trade body, and a partner at Herron Fisher, said, “Our members are telling us that inquiries from directors increased in November, as they looked to understand more about their insolvency or restructuring options and discuss their financial concerns ahead of January.
“The December period will either be a lifeline or the tipping point for a number of businesses – especially those in the retail and hospitality sectors, who have had a challenging year of continued rising costs coupled with cautious customer spending.”
Fisher added, “With the changes to employer National Insurance and National Minimum Wage being introduced in April, the next three months will be critical for firms in these industries and others as they work out how they will manage the impact this additional cost will have on their finances.
“This could lead to an uptick in restructuring work in the first quarter of this year or a rise in corporate insolvencies between March and June – but at this stage it’s too early to tell which of these outcomes is most likely.”
David Kelly, also a partner at PwC, said, “The year ahead is poised to bring fresh challenges, including navigating the implications of the Autumn Budget measures and responding to the evolving actions of clients and suppliers.
“Ongoing resilience is needed across the corporate sector to weather these pressures.”
