The retail industry accounted for approximately one in seven (14%) of businesses that filed for administration in the UK in the first half of 2024, new data from law firm Shakespeare Martineau has found.
Retail accounted for more administrations than any other sector, the data showed, with 119 out of a total of 879 businesses that filed for administration during the period from 1 January to 30 June hailing from the retail sector.
This marks a 16% increase compared to the same period last year, and a 42% rise on the same period in 2022.
Other sectors to see a notable number of administrations during the first half of the year include manufacturing (108, up from 91 last year), construction (105, up from 85), real estate (92, up from 59) and hospitality (78, down from 79).
'Prolonged Economic Challenges'
“The continued increase in the number of businesses filing for administration is indicative of the prolonged economic challenges that are plaguing the country," commented Andy Taylor, partner and head of restructuring at Shakespeare Martineau.
“The data highlights the disproportionate impact on the retail, manufacturing, construction, real estate and hospitality industries in particular, which, together, constitute a substantial proportion of all administrations. Changing consumer buying habits means the retail and hospitality sectors are bearing the brunt, and there has also been a reduction in housebuilding, which has a knock-on effect in the construction and real estate sectors."
Impact From Interest Rates
Administrations have yet to reach the heights of pre-COVID levels, where 940 administrations were recorded in the first six months of 2019, however Shakespeare Martineau noted that the high interest rates experienced during 2023 are putting strain on many firms.
These businesses were developed on models that "thrived in a sub-2% interest rate environment," Taylor added. "Organisations can only bear that pressure for so long before its sustained impact starts to wash through and they begin running out of cash.
“Moreover, HMRC continues to be more active, with threatened enforcement pushing businesses towards considering their options, and many opting for administration as an alternative to being wound up on a compulsory basis."
Greater London was the region that reported the highest number of filings in the first half of the year (22%) followed by the North West (17%) and Yorkshire & The Humber (11%). The South East ranks fourth, with the East of England placing fifth.
