Of the 1,641 businesses that field for administration, 186 came from the manufacturing industry – a 6% increase compared to 2022. Manufacturing was the fourth worst hit industry for administrations last year.
Retail, manufacturing, hospitality, construction and real estate together accounted for 59% of all administrations during the reported period.
The past 12 months have been particularly hard on plant-based food and drink businesses, with a number of high-profile companies caught in the crossfire.
Last month saw V-Bites enter into administration, while LoveSeitan closed its doors in August after failing to convince the public on seitan’s benefits.
Challenges of 2023
Andy Taylor, partner and head of restructuring at Shakespeare Martineau, said the uptick of companies filing for administration in 2023 underscored the challenges faced by businesses amid changing consumer habits, financial pressures and geopolitical uncertainty.
“The cost of money, marked by high interest rates throughout 2023, exacerbates financial strains on businesses with models that thrived in a sub-2% interest rate environment,” said Taylor. “Organisations can only bear that pressure for so long before its sustained impact starts to wash through and they begin running out of cash.
“A shift in consumer buying habits, exemplified by a challenging January for the hospitality sector, adds to the narrative of subdued spending. Moreover, HMRC continues to be more active, with threatened enforcement pushing businesses towards considering their options, and many opting for administration as an alternative to being wound up on a compulsory basis.”
Geopolitical tensions
These pressures have been further exacerbated by the geopolitical tensions in Russia-Ukraine and Israel-Gaza, creating economic uncertainty and supressed growth, while businesses reliant on imports are at the mercy of the troubles in the Suez Canal.
“Many predict the rate of inflation to continue its downward trajectory in 2024, perhaps even approaching Bank of England’s target of 2%,” Taylor continued. “If that trend continues one might anticipate something like three interest rate cuts in 2024, which will hopefully stimulate growth.
“However, the economic landscape remains unpredictable, and our advice remains consistent – seeking professional advice early can open up more options for struggling businesses.
“It is crucial not to ignore the signs and bury your head in the sand and instead, take a proactive approach to address underlying issues. By doing so, businesses can better navigate the tough trading conditions and increase their chances of survival.”
