Company failures to stay high amid surge in wage bills, warns Begbies Traynor

Insolvency specialists Begbies Traynor has warned that escalating wage bills and concerns over prospects for interest rate cuts may sustain high levels of business failures, alongside news of their own financial blow from the recent .

The firm expects a yearly hit of an extra £1.25m come next April following the Chancellor's decision to bump up employers' national insurance contributions disclosed last month. Begbies is actively "reviewing options to mitigate the impact where possible".

It said companies across the UK are expected to remain under pressure as a result of soaring staff costs, with insolvency levels set to remain high. Predictions for potential cuts in interest rates have been pulled back by experts after the Bank of England indicated that inflation still needs to be stablised.

The Chancellor's decision to increase employers' national insurance payments increasing the cost while simultaneously lowering the start point for these contributions has led businesses across various sectors to sound alarms about the financial repercussions. Additionally, another rise in the minimum wage was declared in the Budget, signalling incoming surges in wage bills.

Retail giants like , and , as well as businesses in the hospitality and pub industry, are bracing themselves for sizeable upticks in expenses due to the Budget's tax changes. Ric Traynor, founder and executive chairman of Begbies Traynor Group, warned: "Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels, increasing the need for advice and support from our insolvency and business recovery professionals."

He also revealed that the group had kicked off the year on a high note, with underlying pre-tax profits rising by approximately 16% for the six months leading up to October 31, and revenues also seeing a similar increase. The firm expressed confidence in meeting its projections for the year ending next April.

Current predictions from analysts suggest that underlying pre-tax profits could climb to between £23m and £24.3m, a significant leap from £22m for 2023-24.