Insolvency Expert Warns Labour Budget Could Drive Businesses to Collapse

New Budget is Turning Businesses into Hot Potatoes

Tax increases and a higher living wage are giving companies a double whammy. If you’ve already been feeling the pinch of inflation, rising rates and a slump in consumer spending, the latest budget is the extra squeeze no one wanted.

Rising Numbers of Companies in Administration

1,445 firms filed for administration in the first 10 months of 2024.
A staggering 37% jump since 2022.
High‑employment sectors—retail, manufacturing, construction, hospitality and real estate—cater to 56% of those cases.

What the Budget Actually Means

Chancellor Rachel Reeves is hosting the country’s first Labour budget in 14 years. Her key moves:

Employer National Insurance Contributions (NIC) jump to 15% from 13.8%.
The NIC base threshold slides lower from £9,100 to £5,000.
National Living Wage climbs to £12.21 an hour.

That’s meaning a significant rise in labour costs— and for companies that barely stay afloat on tight margins, it’s a recipe for trouble.

Andy Taylor’s Take

“This budget is a tough pill for UK businesses to swallow,” says Andy Taylor, partner and head of restructuring at Shakespeare Martineau. “Right now, many firms are running on razor‑thin margins. The NIC hike, combined with the lower threshold, will squeeze cash flow even more.” He adds, “If we don’t provide targeted support, we could see more layoffs, cost cuts or outright closures.”

His advice? Get professional help early to open up options before the pressure builds. “Being proactive now could save you from the worst of the changes,” Taylor says.