About 60% of small businesses fear their business will go bankrupt within the next year as a result of economic instability.
More and more businesses are under stress as inflation, rising energy prices and the possibility of the economy slipping into recession. Additionally, traditional Covid debt still needs to be paid off.
Small businesses in Norwich are most at risk of closing, with 74% of small business owners saying they could go bankrupt next year, according to Towergate Insurance.
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Businesses in Manchester, Sheffield and Brighton are also among the top four most at risk of business closure.
Human resources is seen as the sector with the highest risk of closure, followed by finance and manufacturing, with supply chain delays seen as the biggest threat to business survival.
The number of companies on the brink of bankruptcy surged by more than a third at the end of last year, according to bankruptcies, adding to the volatile outlook. Begbeads Trainer.
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This number is expected to increase due to rising costs and consumer spending cuts.
Julie Palmer, a partner at Begbies Traynor, said she is getting more and more calls from business owners who are concerned about their viability.
“What we’re hearing from corporate executives is very distressing,” Palmer said. “We went into 2022 with the hope that the pandemic would be over for good and better times would come, but Russia’s invasion of Ukraine destabilized the global economy, causing inflation to skyrocket and energy prices to rise. They connected and laid the foundation for what appeared to be a global recession.
“Especially in the UK, the strikes are adding to the pressure as staff struggle to get to work and customers are staying away.
“We are getting calls from company bosses who are struggling to dig deep enough to keep fighting. We hear that both the government and HMRC are determined to pursue their debts, while other creditors are increasingly turning to the law to collect their debts.
“Inflation is at its highest level in 40 years, interest rates are at levels not seen in 14 years, and more and more companies are willing to shoulder the burden of debt given the bleak economic outlook. I can see why you’re starting to feel and question the directors: can they continue?”
Small businesses forced to use their savings to survive