The cost of living crisis has provided may be a disaster for most businesses, but it has proved a bonus for one sector.
UK corporate recovery and insolvency specialist firms Begbies Traynor and FRP Advisory have both said they expected much more business in the New Year.
Reporting its half-year results for the six months to the end of October on Tuesday, Begbies Traynor posted a near-doubling of its pre-tax profit.
“We expect continued growth from business recovery and financial advisory, given its increased order book, higher level of enquiries and increasing economic headwinds.” said Ric Traynor, executive chairman of Begbies Traynor.
“Good news for insolvency practitioner Begbies Traynor tends to be bad news for almost everyone else.” said AJ Bell investment director, Russ Mould.
“The company is seeing momentum build across its business — most notably in the insolvency part as UK businesses struggle with weak consumer sentiment, surging costs and rising interest rates.
“Soberingly, Begbies expects to continue to do well moving forward which suggests it can see that there are a large number of firms which are close to the brink.” he added.
Meanwhile, FRP Advisory saw a 25 per cent jump in interim revenue, compared to the same period last year.
“Many businesses have adapted well to disruptive forces, including technological advances,” said FRP chief executive Geoff Rowley.
“However, other businesses have struggled to adapt their business models and are increasingly facing challenges.
“Further pressures on businesses are coming from supply chain issues and rising input costs from energy, wages and raw materials.”
Meanwhile, more than half of the UK's small businesses expect to make less money in the run-up to Christmas this year compared to last year, with one in 10 warning they could be out of business in the New Year, according to a survey by business insurance provider, Simply Business.
In the face of the cost of living crisis, 57 per cent of small businesses survey expect to take less revenue over the crucial Christmas period. One in five small businesses said they make 20 per cent of their annual revenue at this time of year.
Inflation and interest rates have gone up significantly this year and show no little sign of cooling down in the near future. Many, including the Bank of England, predict that the UK is already in what will be a prolonged recession.
Not a happy New Year
The New Year is not expected to bring any respite either. Two-thirds said costs remain their biggest worry next year, with a quarter saying they will be unable to pay their energy bills in 2023.
“Amidst a cost of living crisis, when so many are still in recovery mode from the £126.6 billion ($156.5 billion) impact of the pandemic, this Christmas is, quite simply, a lifeline for small businesses.” said Alan Thomas, UK chief executive at Simply Business.
A recent survey of 700 firms by business umbrella group the Confederation of British Industry showed that UK companies expect energy costs to double when a government support scheme ends at the end of March next year.
“Small businesses account for 99% of all British businesses, contributing trillions of pounds a year in turnover,” Mr Thomas said.
“The recovery of our economy and communities is directly linked to their success. We must support small businesses all year round, and there’s no better time to start than during this incredibly important festive period.”