Soaring material costs have led to a steep rise in insolvencies in the retail and construction industries of almost 50 per cent.
The war in Ukraine and its impact on rising fuel prices, brought concerns over supply chains pressures into sharp focus this week, new research from tax and audit specialists Mazars has shown.
During 2021-22, there was a 21 per cent rise in insolvencies among retailers from the previous year, to three short of 1,000 companies going down.
The problem hit the UK construction industry even more acutely, as it experienced a 45 per cent increase in insolvencies to 2,775 bankruptcies, with prospects for the coming months looking grim.
With inflation set to increase and interest rates likely to be put up this week, Rebecca Dacre, a partner at Mazars, warned the problem will only get worse. Costs have “become a very significant problem over the last two years” she said, and the “war in Ukraine has only worsened it”.
“A long line of issues have disrupted supply chains for UK businesses, from Brexit to Covid to a shortage of workers”.
“The dam now seems to be breaking” due to this pressure, she added that many firms were unable to survive a “wide range of rising costs” since the start of the pandemic, “just as Government support for businesses has been switched off. Some of them haven’t been able to survive that.”