Nearly 500,000 British businesses are teetering on the edge of financial collapse, according to Begbies Traynor, a firm that helps companies restructure to deal with insolvency.
The number reached 494,000 in 2019’s fourth quarter, compared to 481,000 in the last three months of 2018. The number of British businesses in “significant distress” has risen 81 percent since 2016.
Of the 22 economic sectors the firm monitors, 15 showed increased stress levels from the third to the fourth quarter of 2019. The hardest-hit sectors were construction, real estate, and retail, which have seen no growth for the longest period since 1957.
“UK businesses are continuing to struggle as the economy slows,” said Ric Traynor, the firm’s managing chairman. “If this trend of rising significant distress continues, we could for the first time witness financial distress creeping over the half-million milestone.”
The Begbies Traynor findings were released days before the Bank of England decided to hold interest rates steady at 0.75 percent.
TREND FORECAST: Taken as a whole, Europe is the UK’s largest trading partner, accounting for some 45 percent of all UK exports. Now that Brexit is official and no new deal has been struck with Brussels, the economic future of UK trade with Europe is undetermined.
Already facing downward economic pressure, according to the Organization for Economic Cooperation and Development (OECD) study released last November, the UK is one of the worst-performing developed economies in the world since the last general election in 2017. Moreover, Britain’s productivity growth over the last decade is the worst since the start of the Industrial Revolution 250 years ago.
Therefore, considering export trade uncertainties combined with a slowing global economy, we forecast the Bank of England will cut interest rates, putting downward pressure on the pound and pushing inflation higher while being ineffective in restoring economic growth.
