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Business News Wales
22-05-2025
- Business
- Business News Wales
'Increasing Costs and Uncertainty' Continue to Drive Corporate Insolvencies
Increasing costs and uncertainty are continuing to drive corporate insolvencies, the Wales Chair of insolvency and restructuring trade body R3 has said. Corporate insolvencies in England and Wales increased by 2.9% in April 2025 to a total of 2,053 compared to March 2025's total of 1,996, and decreased by 5.1% compared to April 2024's total of 2,163. Corporate insolvencies increased by 13.2% from April 2023's total of 1,813. Personal insolvencies in England and Wales increased by 7.9% in April 2025 to a total of 10,012 compared to March 2025's total of 9,282, and increased by 4.4% compared to April 2024's total of 9,586. Personal insolvencies increased by 8.2% compared to April 2023's total of 9,252. Bethan Evans, Wales Chair of R3, the UK's insolvency and restructuring trade body, said: 'April's corporate insolvency figures were the highest we have seen since July 2024. 'Creditors' Voluntary Liquidations remain the process companies most commonly enter into and their consistently high numbers reflect the ongoing challenges, high costs and political and economic uncertainty businesses face. It demonstrates the toll these challenges are taking on business finances and confidence in their ability to turn their situation around. 'Compulsory liquidations have also hit their highest level in more than five years as creditors chase down unpaid debts in an attempt to meet their own payment deadlines. This is led by HMRC as the Government attempts to balance the national books. 'Increasing costs and uncertainty are continuing to drive corporate insolvencies. April saw the introduction of the new rates for Employers' National Insurance Contributions and Minimum Wage, which have increased overheads for businesses at an already challenging time. Many businesses will have already increased prices and cut expenditure to try to maintain margins and cope with the existing economic challenges. SMEs in particular will find it increasingly difficult to respond to further cost increases. 'It is unlikely that we will see the full impact this will have on businesses until later in the year, but the prospect of these changes being introduced has influenced a number of directors' decisions to seek insolvency and restructuring advice and consider the future of their businesses. The recent increase in unemployment indicates that the tax increases, along with the Employment Rights Bill coming into force, has also affected hiring levels as management teams wait to see how it will affect their wage bills, and we expect this to continue until the picture is clearer. 'Alongside this, businesses have faced the impact of the introduction of US tariffs. While some of the outcomes from the President and Prime Minister's recent announcement will be a relief to businesses in a range of sectors, a number of tariff details still need to be confirmed. There is no denying their introduction will make it more expensive to export to America. The uncertainty and unpredictability around US trade policy generally is also likely to affect costs, growth and investment as both business owners and lenders assimilate the impact on revenue and profits. 'Looking across the economy, the sectoral picture is a mixed one. Construction continues to be sensitive to fluctuations in the price of materials, hesitancy of clients in commissioning new work and payment terms, while the care sector is trying to navigate how it will manage the Government's proposals to end overseas recruitment for social care visas. On a more positive note, retailers have benefited from the late Easter and improved weather, which has led to an increase in sales, and hospitality has also seen a rise in activity and spending levels. However, there is no escaping the influence the changes to National Insurance and Minimum Wage could have on business finances with more becoming financially distressed.' Bethan, who is a partner at Menzies LLP, continued: 'Turning to personal insolvencies, April's figures were the highest we have seen for this particular month since April 2020 – although the balance between the processes has shifted significantly since then due to changes in the Debt Relief Order (DRO) debt threshold, the administration fee and in regulations around how Individual Voluntary Arrangements (IVAs) are marketed. Compared to March 2024, personal insolvencies are up significantly, with more people entering IVAs and DROs in an attempt to help manage their debts. 'When these figures are combined with those applying for Breathing Space, they suggest that the debt problem in England and Wales, which has been building over the last couple of months, is starting to be reflected in the number of personal insolvencies. This month in particular, IVA and DRO numbers have increased, and Breathing Space numbers have fallen, which could be seen as a sign that more people need practical help addressing their debts than last month. 'April also saw increases in a range of household bills, and this may have been the final straw for those who were already struggling to make ends meet after years of rising costs. For those who are not in this position, it will have led to them taking a closer look at their outgoings and making adjustments to help balance their household budgets. Wage growth has slowed despite falling inflation which remains above the 2% target, and it is very clear that people's money does not buy what it did six or twelve months ago. 'My message to anyone in Wales who is worried about money is a simple one: seek advice as soon as possible. We know how hard it is to talk about your concerns about your finances, but having that conversation while your worries are new gives you more options to address them and more time to take a decision about your next step. Most R3 members in Wales will give prospective clients a free consultation so they can learn more about their circumstances and outline some of the potential options for addressing them.'
Spectator
22-05-2025
- Business
- Spectator
Is Britain heading for bankruptcy?
We can thank Rachel Reeves for one thing: setting up a real-world experiment to show the Laffer curve in action. April's figures for the public finances, like yesterday's figures for inflation, are truly dreadful. April should have been a bumper month for tax receipts, being the month that the rise in Employers' National Insurance Contributions (NICs) came into effect. Instead, borrowing surged to £20.2 billion in a single month. It took borrowing for the year 2024/25 to £18.3 billion, a smidgeon less that the Office for National Statistics (ONS) estimated last month but £11 billion higher than the Office for Budgetary Responsibility (OBR) had forecast. Government receipts in April did advance by a fairly modest £5.6 billion compared with April 2024. However, this was outpaced by growth in spending, which was up £6.6 billion compared with April 2024, thanks to higher public sector wages and galloping benefits claims. Departmental spending in April was up £4.2
The Independent
14-02-2025
- Business
- The Independent
Handbag expenses and lying on her CV: Why Keir Starmer still won't fire Rachel Reeves
How much easier would Keir Starmer 's life be if his chancellor, Rachel Reeves, decided that the various allegations flying around about her CV and past behaviour at a bank were 'too much of a distraction' to the important work of the government? More important even than that; how much of a boost would it give to the government's popularity? And, lest we forget, would it be in the national interest, quaint as such a question may be? The answer is that replacing Reeves would generate some sensationalist headlines, keep the lobby journalists occupied for a few days – and make virtually no difference to anything. If Reeves has made mistakes – and the policy choices she made were questionable – then they were not hers alone. They were agreed by the prime minister and the whole cabinet – and dissent within the Labour Party was muted. With hindsight, it's been reported, Keir Starmer thinks the most hated of them all – means-testing the pensioners' fuel allowance – was 'a mistake'. And maybe even Reeves would agree. The so-called 'tractor tax' on farms has suffered from a complete lack of consultation, but, again, it was agreed and is still defended by the prime minister. The hike in Employers' National Insurance Contributions (NICs) threatens to push Britain into recession, but no one – inside or outside Labour – has suggested a better way to raise £25bn. The pay rises of doctors and train drivers were probably inevitable, unless the government wanted the nation to carry on struggling through incessant strike action. Reeves, in other words, has been carrying out the policy of the government. Given their manifesto commitments and the political constraints they created for themselves, if Reeves went, then the policy would remain unchanged. To borrow a phrase, there is no alternative to fixing the public finances as a necessary condition for longer term growth and stability, even if it means a painful slow down now. It is true that Reeves lacks a certain political touch, is an indifferent speaker, presents a robotic persona on the media and is a poor salesperson for her policies. It's obvious that health secretary Wes Streeting would do the job better, in presentational terms, but the government cannot immediately reverse all the tax measures taken since they came to power, even if they wanted to. The result would be chaos on the markets, and they have been jittery enough in recent times. As ever, when a chancellor resigns, it damages the prime minister, because it always looks as though they are carrying the can for doing what their boss wanted. That is unfair, and invariably true. Indeed, some chancellors get sacked even though they privately disagreed with their prime minister's policy. The saddest, most spectacular and quite recent example of this was poor old Kwasi Kwarteng. A victim, to some extent, of his own arrogance, it seems he urged Liz Truss not to go so far and so fast in her notorious 2022 'mini Budget '. She told him she was in a hurry, and when it all went wrong she jettisoned him in a futile attempt to save her premiership. Replacing him with Jeremy Hunt calmed the financial markets, but left her looking looking even more pointless. Truss was a rare example of such justice. When John Major's policy of pegging the value of the pound to European currencies collapsed in 1993, he effectively fired his friend and chancellor, Norman Lamont, (a cabinet demotion was offered and refused). Lamont became an embittered critic, and it was never a glad confident morning for Major again – but he survived. Much the same goes for when James Callaghan took the blame for devaluation in 1967. Prime ministers do not emerge unscathed from such traumas. Obviously these fresh questions about Reeves' personal behaviour in the past – some dating back 20 years – cannot be blamed on Starmer, which makes this a different kind of case, and one where the PM would suffer less collateral damage if she was moved. Yet she (and he) would not be in such difficulties now if the economy were booming and the public services were operating as everyone wishes they would. Even fewer people would care about why Reeves left her job at Halifax in 2006, or her habit of exaggerating her economic expertise (ironically irrelevant to her job anyway). The fact is that dropping Reeves would make minimal difference to the government's economic policy, Labour's poll ratings, or to the UK's trend growth rate. In fact, it might even make matters worse. Reeves' whole schtick is to be the ' iron chancellor '; impervious to criticism and appeals to change policy from angry farmers, disappointed pensioners or her own backbenchers. She is there to do the dirty work, take the punishment and abuse, and just keep going, regardless. It is supposed to impress the markets and prove that a Labour government is able to manage to take the gruesome decisions necessary when you're running the public finances. She might have once been cavalier with the company credit card, indulging colleagues with nice presents using other people's money, but she's certainly not going to do that with His Majesty's Treasury. Quite the opposite. She's not a great politician, nor a distinguished economist, for whatever that's worth – but she is all they've got at the moment and it is far too early to sacrifice her. In due course she can be shifted to the foreign office. For now, she's safe.
