Corporate insolvencies could climb 10 per cent this year Allianz has warned, stating the UK is more exposed than other European nations to a spike in business insolvencies.
The insurer’s global insolvency outlook revealed that 15% of small and medium-sized businesses in the UK are at risk of going bust, the highest proportion in Europe. This is compared to 14% in France, 9% in Italy, and 7% in Germany.
Sectors such as retail, manufacturing, construction, and real estate are particularly vulnerable due to weaker demand and higher borrowing costs.
Insolvencies climbed to a thirty-year high in 2023 as firms struggled under the weight of the Bank of England’s rate hikes. Interest rates were raised from 0.1 per cent at the end of December to a post-financial crisis high of 5.25 per cent.
The Bank’s rate hikes also helped tip the UK into a shallow recession in the second half of last year.