The UK is undeniably facing a significant cost of living crisis. While inflation has dipped to 3.4% in February 2024, this still means everyday essentials are considerably more expensive than a year ago. This situation presents a complex challenge, both for individuals and businesses.

Understanding the Causes:

Several factors have contributed to the current situation:

  • Global Disruptions: The pandemic’s lingering effects on supply chains, coupled with the war in Ukraine, have disrupted energy supplies and essential goods.
  • Energy Price Hikes: The sharp rise in global energy prices has significantly impacted energy bills, a major contributor to expenses.
  • Economically inactive work force: a large increase in the under 35 population being “economically inactive” ie not working through illness or choice, has led to shortages of skilled workers and challenges to the recruitment and retention of staff

Impact on Insolvencies:

As our practice knows all too well, the current crisis is straining business finances. We can expect to see an increase in personal insolvencies as individuals struggle to meet essential expenses. Businesses, too, may face challenges, with rising costs impacting profitability and potentially leading to corporate insolvencies.

The Road to Recovery:

While the situation is serious, there’s still hope for economic recovery. Here are some key considerations for the future:

  • Government Intervention: Continued support packages focused on vulnerable households and essential sectors can ease the immediate burden.
  • Investment in Energy Security: Long-term strategies to diversify energy sources and improve energy efficiency are crucial for long-term price stability.
  • Boosting Productivity: Policies that encourage investment and innovation can lead to higher wages and a more competitive economy.

 Supporting Businesses and Individuals:

As insolvency practitioners, we play a vital role in navigating this crisis. By providing effective restructuring solutions for businesses, we can help prevent unnecessary insolvencies or enable business owners to develop a strategy. Additionally, advocating for clear communication and early intervention from creditors can offer businesses struggling with debt a path towards financial recovery.

The cost of living crisis is a significant challenge, but by working together, we can navigate these turbulent times and build a more resilient future for the UK economy.

If you need advice for your own business or to support your clients, you can email us at or call 0161 474 0920 to arrange an initial informal chat.