The latest figures from the Insolvency Service reveal that February saw the highest number of compulsory liquidations in over a decade, with 393 companies forced to close.
It seems there’s no end in sight for businesses with small businesses preparing for significant bill increases from next month, with National Insurance contributions increasing from 13.8% to 15%, with the threshold dropping from £9,100 to £5,000.
They are also postponing investment decisions due to uncertainty surrounding Chancellor Rachel Reeves’ Spring Statement, according to a survey by Bibby Financial Services (BFS).
Although Prime Minister Sir Keir Starmer has pledged to reduce compliance costs for businesses by 25% by the end of the current Parliament, it remains to be seen whether this can be achieved.
British businesses are pessimistic about their economic future, with a recent S&P Global survey indicating that UK sentiment has declined more sharply than any other major economy since October. The survey highlights that UK firms are planning mass job cuts.
The big question is what will happen to interest rates.
Rates are at their lowest level for 18 months following a reduction from 4.75% in February – the third cut since August 2024. However, the Bank said it would take a “gradual and careful” approach to further reductions.
After many months of keeping rates at 16-year high of 5.25%, the Bank of England cut them to 5% in August 2024, and again to 4.75% in November. It held rates in December, before the cut to 4.5% in February.
While announcing the February rate decision, the Bank also cut its growth forecast for the UK economy in 2025 from 1.5% to 0.75%.
And there is even more uncertainty due to President Trump’s tariff war.
Canada and Mexico are forecast to see the biggest impact as they have had the harshest tariffs imposed on them,
In response, Canada and the EU have both announced retaliatory tariffs.
The nail-biting is clearly destined to continue for businesses for a while yet.