A growing number of UK businesses are at risk of going under as costs spiral and COVID loan repayments become due, according to a report from insolvency firm Begbies Traynor.
Although COVID restrictions have been lifted, some firms are still feeling the impact of disruptions to supply chains, and the price of energy and other inputs have risen sharply.
Firms are finding it hard to recruit staff in some sectors, and wage costs, including the minimum wage and national insurance payments, have gone up.
As the cost of living rises, many UK households are looking for ways to save money, putting further pressure on businesses that rely on discretionary spending, like bars and restaurants.
The construction and hospitality are the sectors struggling most, according to the report.
Julie Palmer, Partner at Begbies Traynor, said: 'The government's finances are themselves taking a hit from the increasing interest environment; they are simply not able to introduce further significant funding into the system, and they now have a choice to make. Do they rush to recover funds handed out during the pandemic to ensure there was a functioning economy afterwards? Or look for ways to control the number of businesses that fail?
'Having put so much money into protecting businesses over the past two years, ministers won't want to see it wasted as companies collapse, unable to repay their debts.'