The Trades Union Congress (TUC) has slammed the Tory government over what it calls its “economic doom loop” that has “sucked the life out of the UK economy”. It comes as the number of businesses going bust via insolvencies has hit a 30-year high.
Insolvencies: through the roof
As the Financial Times (FT) reported:
Corporate insolvencies in England and Wales rose to their highest level since 1993 last year, according to official figures that lay bare the challenges facing companies amid slowing demand and high production costs.
There were 25,158 registered company insolvencies in 2023, up 13.7 per cent from the previous year — the highest number for 30 years, the Insolvency Service said on Tuesday.
The figures included 20,577 voluntary liquidations, 9 per cent higher than in 2022 and the highest number since the series began in 1960.
Of course, the warning signs over businesses going bust were already there. In December 2023 alone, usually a quieter month for insolvencies, figures were up 2% year-on-year. At the time, investment manager at the Wealth Club Nicholas Hyett said:
December is a seasonal low point in terms of insolvencies – with the smaller number of working days affecting the number of insolvencies that are registered. However, a 2% increase year-on-year suggests that companies are struggling with the higher interest rate environment.
Where’s the proper plan?
Hyett was correct. Moreover, at a time when houses are desperately needed, it’s construction companies which top the table of insolvent companies. The Construction Index noted that:
According to an analysis by accountancy firm Mazars, 17% of all insolvencies were construction companies last year.
The construction sector is experiencing the highest number of insolvencies of any industry in the UK, it says, with 4,370 companies failing in the year to 30th November 2023. This was a 7% increase on the previous year and a 76% rise from 2,481 in the year to November 2021.
The TUC has slammed the Tories over the figures. Its general secretary Paul Nowak said:
Businesses are struggling because the Conservative government has sucked the life out of our economy. We can’t afford to stay in this doom loop of cuts, falling living standards and stagnation. We need a proper plan for jobs and growth that can get living standards rising again.
A “proper plan” from this government seems like a long way off. With the Bank of England expected to keep interest rates at 5.25% until at least the autumn, the economic outlet for businesses – and therefore, workers – is unlikely to improve any time soon.
Featured image via UK parliament/Maria Unger
