Thousands of firms at risk of collapse in 2023
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6th March 2023Business confidence has reached its lowest level since the 2009 global financial crisis, according to the Institute of Chartered Accountants in England and Wales (ICAEW) and their Business Confidence Monitor (BCM).
An accompanying report shows shows that businesses are struggling with record high inflation – including stratospheric energy costs – and the ongoing cost-of-living crisis, which is affecting customer demand.
The BCM surveyed 1,000 chartered accountants in the UK and found that confidence is now at -23.4 on the index, the lowest level since 2009.
The ICAEW says that construction, property, retail, wholesale and manufacturing sectors are among the hardest hit, with their report highlighting difficulties accessing capital as a key challenge.
The survey also found that a third of businesses face difficulties with customer demand due to the cost-of-living crisis, higher interest rates and a slowdown in the world economy.
Retailers in particular are struggling with people cutting back on discretionary spending.
Michael Izza, ICAEW chief executive said: “Financial challenges have had a big impact on certain sectors and across-the-board investment is set to fall over the next year, but it is notable that sentiment could be starting to level off.
“With confidence at a decade low, it’s time for the Chancellor to outline his long-term vision for growth for Britain, injecting resilience into the economy and bringing in a period of renewal for the future.”
Despite the low confidence reading, the survey found that domestic sales growth was stable, while export sales growth was stronger than a year ago.
However, the report warns that high inflation and a tight labour market have driven up wages, with salary growth at its highest level since the survey began in 2004.
Tom Fox, licensed insolvency practitioner at Umbrella.UK Insolvency, highlighted the challenges that businesses are currently facing with rising costs and weakening customer demand.
“While the last decade-and-a-half has seen business confidence dip several times, particularly during the coronavirus pandemic, confidence rebounded in 2021,” Fox said.
“Now, rising energy costs and the cost-of-living crisis have made businesses and their accountants much more pessimistic. Despite the survey covering a wide range of sectors, regions, and company sizes, it’s clear that some businesses are struggling more than others.”
If you are worried about the financial position of your company, speak to a member of our business insolvency team today. Call: 01625 544 460.