More UK retailers in ‘critical financial distress’ since Budget

The number of UK retailers with ‘critical’ financial issues has surged following the latest Budget and sluggish sales, according to new figures.

Insolvency specialist Begbies Traynor revealed 2,124 UK retailers were in ‘critical financial distress’ between the start of October and 16 December, compared to 1,696 in the prior three months.

It said companies that provide retail sales via mail order, as well as takeaway food shops and mobile food stands, were particularly affected.

Begbies suggested this reflected the ‘compounding pressures’ of seasonal demand, growing operational costs and consumer confidence sliding after the October Budget.

Chancellor Rachel Reeves declared that employers would pay a 15 per cent National Insurance rate on staff salaries exceeding £5,000 from April rather than the current 13.8 per cent levy on wages above £9,100.

She also said the National Living Wage would go up by 77p to £12.21 per hour, alongside increases in the capital gains tax rates on selling business assets.

Impact: The number of UK retailers with ‘critical’ financial issues has surged following the latest Budget, according to insolvency specialist Begbies Traynor

Many prominent retailers have warned the measures could force them to hike prices, reduce pay and jobs, or close down stores.

At the same time, the UK retail industry is experiencing subdued demand due largely to continued cost-of-living pressures.

The Office for National Statistics estimated retail sales fell by 0.7 per cent in October and only expanded by 0.2 per cent in the four weeks ending 23 November, instead of the 0.5 per cent forecast by analysts.

Nonetheless, Begbies found the number of UK retail businesses in ‘critical’ financial distress was marginally down year-on-year, while those in ‘significant’ distress were 17 per cent lower at 28,747.

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