Throughout the summer, the cost-of-living crisis has been making news headlines at every turn. It is now clear that it is severely impacting demand, as consumers must make difficult spending decisions at a time when inflation in the UK is at its highest point in over 40 years – pushing back to the era of the energy crisis in the 1970s.
According to the Office for National Statistics the Consumer Price Index, including owner occupiers’ housing costs (“CPIH”) rose by 8.8% over a 12-month period to July 2022, up from 8.2% in June. The largest upwards contributions to the annual CPIH inflation rate in July 2022 come from housing and household services, transport costs, and food and non- alcoholic beverages.
There are various (very well) publicised reasons for these inflationary rises such as the COVID pandemic, the Russia / Ukraine conflict (which is ongoing and unlikely to end in the foreseeable future), and the lingering fallout following Brexit. It has turned into an energy crisis and a 6% inflationary rise following the increase in Ofgem’s energy price cap in April 2022 has resulted in the price of gas doubling since May 2022.
It is clearly regrettable, as it means that energy costs at home, the workplace and from a transportation perspective are spiralling to incredibly difficult levels which will have long-lasting repercussions from a social and economic standpoint. The steps that the new Prime Minister Liz Truss take to deal with this crisis will be significant (updates are expected on 8 September but it is understood that household energy prices will be capped at £2,500).
It is anticipated that consumer product suppliers will experience significant changes in demand, as economies also adjust to the green transition, consumers will understand the need to start to re-prioritise their spending habits in line with the significant changes to their bills.
This is likely to lead to an uptick in restructuring and insolvency work in the coming months. June 2022 saw 1,691 insolvencies – 40% higher than 2021 and 15% higher than June 2019 ( 1,467 in that pre-pandemic month).
There are now many more pinch points being felt by borrowers and business support teams have been growing in anticipation of a spike in work in many of the lenders (whether in the challenger space or clearing banks).
Our 10-Partner R&I team at HCR is well placed to guide our clients; whether that be individuals, corporates (either directly or indirectly impacted by the cost-of-living crisis), lenders or insolvency practitioners across all our different locations nationally.
We are hosting a conference at the Museum of London on 13 October 2022, where all the above topics together with legal and case law updates will be debated. We are delighted that we will also be joined by Jacqui Oatley who will host a fireside football chat with Paul Parker and John Hartson who will no doubt be discussing the upcoming world cup in Qatar as well as the success of the Lionesses at the recent Euros championship.
We do hope that you will be able to join the R&I team at this event and ask that you book your tickets via the attached link.