In the first half of 2023, a total of 759 UK firms went into administration (compared to 621 in 2022), with manufacturing accounting for 12% of these administrations. In third place was the construction sector with 85 businesses entering administration, with hospitality in fourth on 79.
While administrations have not yet returned to pre-Covid levels (there were 940 in the first six months of 2019), Andy Taylor, partner and head of restructuring at Shakespeare Martineau, warns that more businesses will fail unless inflation is controlled and interest rates stop being increased.
“Given the prolonged economic uncertainty that is plaguing the country, the increase in the number of businesses filing for administration is no surprise,” he says. “HMRC is definitely taking a harder line than in previous periods and its threat of enforcement is certainly pushing some businesses towards considering their options, with some seeking administration as an alternative to facing a winding-up petition.
Taylor: HMRC is taking a harder line
“We’re seeing a steady flow of corporate failures,” Taylor adds. “Should some other ‘bad news’ rear its head, then that is only likely to increase. Businesses and individuals need to see interest rates and inflation come down. With a period of stability, we will see confidence increase.”
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