In January 2025, corporate insolvencies in England and Wales reached a five-year high, with 1,971 companies entering insolvency—a year-on-year increase of 11%. This surge is attributed to prolonged economic challenges and anticipated rises in labor costs, including increases in employers' national insurance contributions and the national minimum wage. Experts warn that sectors employing large numbers of minimum wage workers, such as retail, leisure, and hospitality, are particularly vulnerable. Despite the Bank of England's efforts to stimulate growth by cutting the base rate, business confidence remains low, leading to uncertainty in investment and expansion plans. The government has announced a 6.7% increase in the national living wage, from £11.44 to £12.21 per hour, effective in April, further intensifying cost pressures on businesses.
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