Experts predict that the weight of the pain will be felt in the retail, hospitality and construction sectors.
Glen Flannery, a partner in the restructuring and insolvency of the CMS City Law Firm, says: “We have already seen an increase in bankruptcies in more vulnerable sectors such as construction and energy retail.
“The impact on other sectors has been less pronounced, but the number of business failures has been increasing as government support related to the pandemic has been withdrawn.”
FRP’s Rowley believes the crisis in retail and hospitality could be especially acute. He says: “Hospitality has recovered from the pandemic, but consumers will be looking to tighten their belts in the autumn, especially when energy bills rise again in October.”
CMS Flannery agrees. “Many consumer-oriented companies, such as hospitality and leisure, have experienced a resurgence of accumulated demand following the abolition of Covid restrictions.
“However, this is expected to soften as the strong pressure on household disposable income bites.”
However, Quantuma’s Bonney believes economic hardship could be so widespread that the impending storm could be “industry agnostic.”
“There is a lot of vulnerability in SMEs [small and medium-sized enterprises] end of the market. Any business that is heavily dependent on energy is also particularly susceptible to risk. “
British small businesses also got into cheap debt during the pandemic. At the end of last year, the Bank said that a third of British small businesses were classified as heavily indebted, more than twice as many as before the pandemic.
SMEs, many of which would have failed to meet pre-pandemic lending requirements and had never taken out loans before, accounted for about two-thirds of the £ 79bn increase in UK corporate debt by the end of 2019 and the first quarter of 2021, the Bank warned.
So how far could things go, or rather, how good could they be for insolvency and restructuring professionals? Bonney is blunt: “A storm is approaching.”