Experts predict that the severity of the pain will be felt in the retail, hospitality and construction sectors.
Glenn Flannery, a partner in restructuring and bankruptcy at City CMS, said: “We are already seeing a jump in failures in more vulnerable sectors such as construction and energy retail.
“The impact in other sectors is less pronounced, but the number of corporate failures is increasing overall as government support for the pandemic has been withdrawn.
Rowley of FRP believes the crisis in retail and hospitality could be particularly acute. He said: “Hospitality has recovered from the pandemic, but consumers will seek to tighten their belts in the autumn, especially when energy bills rise again in October.
Flange from CMS agrees. “Many consumer-oriented businesses, such as hospitality and leisure, are experiencing a resurgence of accumulated demand after the removal of Covid’s restrictions.
“However, this is expected to be mitigated, as the sharp decline in household disposable income is biting.”
Yet Bonnie of Quantuma believes that economic hardship can be so widespread that the impending storm may be “sector-independent.”
“There are many vulnerabilities in SMEs [small and medium-sized enterprises] end of the market. Any business that relies heavily on energy is also particularly vulnerable. “
The British small business also got hooked on cheap debt during the pandemic. Late last year, the bank said one-third of small businesses in the UK were classified as highly indebted, more than twice as much as before the pandemic.
SMEs, many of which would not have met the pre-pandemic lending requirements and never received loans before, accounted for about two-thirds of the UK’s corporate debt increase of £ 79 billion between the end of 2019 and the first quarter of 2021. ., warned the bank.
So how bad could things be – or rather how good could they be for insolvency and restructuring practitioners? Bonnie is adamant: “A storm is coming.”
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