The recent budget announcement could prove to be the breaking point for many struggling UK businesses, according to Ric Traynor, executive chairman of leading corporate restructuring firm Begbies Traynor.
The chancellor’s decision to raise employers’ national insurance contributions is expected to cost Begbies Traynor approximately £1.25 million annually. Despite this cost to his own organisation, Traynor indicates that his firm may ultimately benefit from these changes, as their insolvency specialists have witnessed increased activity in recent weeks.
The impact appears particularly severe for labour-intensive sectors, with Traynor noting, “We’ve definitely seen an increase in activity since the budget from those very marginal businesses which are heavily people-cost based.” Retail, hospitality, and construction industries are expected to face significant challenges, given their reliance on employees often paid at national minimum wage levels, which is also set to rise.
Begbies Traynor, employing approximately 1,000 staff across the UK, has reported strong financial performance with revenue and profit before tax increasing by 16 per cent to £77 million and £11.5 million respectively in the first half of their financial year. The firm’s board remains confident about meeting market expectations for an adjusted pre-tax profit of £23.7 million this year.
The company’s share price reflected market confidence, closing up 1.9 per cent at 95½p, valuing the business at £147.8 million. Traynor is exploring ways to offset the additional tax burden, including potential fee increases, while aiming to maintain competitive staff compensation to retain talent.
The current economic climate, characterised by high inflation, rising interest rates, and a cooling global economy, has created what Traynor describes as a “perfect storm for businesses.” These conditions, combined with the new budget measures, suggest continued growth in corporate restructuring activity throughout the coming year.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.