Markets in the UK and across Europe rose on Monday, following a strong session in Asia, as business group CEBR predicted the strain of heightened interest rates are set to trigger a higher volume of insolvencies in the UK in 2024.
The FTSE (^FTSE) was up 0.3% in early trade, while Germany’s Dax (^GDAXI) rose 0.2% and France’s Cac (^FCHI) climbed 0.2%.
There were more than 6,700 insolvencies in the second quarter of this year, double what was seen in a typical quarter in the pandemic, the CEBR report said. The number of quarterly insolvencies averaged 4,100 between 2015 and 2019.
CEBR’s models suggest that there could be 7,000 insolvencies per quarter on average across 2024. The group also forecast a recession in the UK, with two consecutive quarters of contraction in GDP in Q4 2023 and Q1 2024.
Insolvencies previously peaked in 2009 during the financial crisis.
“Even if we take account of the fact that some of the more recent insolvencies are businesses that might have collapsed in 2020 and 2021 (if there had not been pandemic-induced government support) insolvencies are reaching worrying levels,” the report added.
Read more: UK house price growth in August weakest since 2009
Many businesses took on debt during the pandemic to survive and are still repaying that now. Food services appears to be the sector in the most trouble, according to CEBR data.
Markets are closed in the US today for Labor day.
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