More big companies set to collapse in 2024, industry experts warn

More big firms are likely to go bust over the next year amid the "double whammy" of high borrowing costs and pressure on consumer budgets, according to insolvency experts.

It comes after a year of tough economic conditions resulting in increased business failures during 2023.

Official figures from the Insolvency Service last month showed the total of company failures over the first 11 months of 2023 were more than reported during the entirety of 2022.

Retail and hospitality contributed to business failures, following the impact of higher energy prices, pressure on consumer finances and borrowing costs.

Around 14% of all insolvencies came from retailers and 17% from hospitality.

Rob Hornby, Partner and Managing Director of AlixPartners, said he expects company insolvencies to continue apace in 2024.

"We are expecting it to be a big year for insolvency," he said.

"That is likely to be across the board, both in terms of geographies and sectors."

Hornby and Richard Fleming, Managing Director and Head of Restructuring for Europe at Alvarez & Marsal, both said they expect more firms to use restructuring plans this year in an effort to avoid full administrations.

Nevertheless, Fleming said there was potential for some large failures next year as those with large debt burdens face particular pressure due high interest rates.

"We are expecting a similar level of insolvencies overall in 2024, but we should see an increased number of larger cases," he said.

"The impact of higher interest rates will increasingly be felt by companies who need to service their debt and by households on their mortgage payments.

"Therefore, we’re expecting a double-whammy impact on companies across the UK, with a slowdown in consumer demand and higher borrowing costs, all putting stress on margins."