Begbies Traynor anticipates a significant increase in business insolvencies following recent budget changes.
- The rise in National Insurance contributions is putting additional strain on businesses already facing economic challenges.
- Begbies Traynor, a leader in insolvency services, foresees benefits from increased demand despite facing higher operational costs.
- Experts suggest that insolvency levels will remain elevated due to prolonged economic headwinds.
- Industry analysts have adjusted profit expectations as businesses navigate new financial pressures.
Begbies Traynor, renowned for its expertise in insolvency services, anticipates a surge in business insolvencies following the Chancellor’s decision to increase employers’ National Insurance contributions. The firm expects that this budgetary change will further exacerbate existing economic pressures on UK businesses, already struggling with rising interest rates and a global economic slowdown.
While Begbies Traynor faces an annual increase in costs of approximately £1.25 million due to the hike in National Insurance, it predicts a silver lining in the form of heightened demand for its insolvency and restructuring services. Ric Traynor, Executive Chairman, highlighted, “Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates will extend the period of elevated insolvency levels.”
Despite its main focus on insolvency, Begbies Traynor provides a wide array of professional services including accounting, surveying, and legal advice – aiding businesses in areas such as forensic accounting investigations and corporate restructurings. Following the pandemic, the past year and a half has seen a notable increase in its workload, handling significant cases including the administration of Worcester Warriors rugby club and stationery retailer Paperchase.
The company has strategically expanded its team to meet the growing demand for insolvency expertise. In the first half of the financial year, from May to October, revenue and pre-tax profit climbed by 16% compared to the previous year, reaching roughly £77 million and £11.5 million respectively. Ric Traynor described this period as a “very good start,” driven by healthy growth across its business segments.
Despite new financial hurdles, industry analysts remain optimistic about Begbies Traynor’s future. Jamie Murray from Shore Capital remarked that current insolvency volumes surpass pre-Covid levels due to the ongoing impact of budgetary measures. However, given the additional National Insurance costs, future profit forecasts for 2026 and 2027 have been slightly reduced by 5%.
Currently, Begbies Traynor’s market positioning seems strong, with the firm experiencing its eleventh consecutive year of profit growth. Shares, however, saw a minor drop by 0.6% to 93p, valuing the company at £150 million. This delicate balancing act reflects the challenging financial landscape businesses currently face.
The latest budget changes are poised to intensify financial stress on UK businesses, yet firms like Begbies Traynor may find opportunities amidst these challenges.
