Sharp rise in companies in "financial distress" in wake of National Living Wage

Six months after the introduction of the National Living Wage, 97,342 businesses were experiencing "financial distress" within the sectors most impacted by it, according to research by insolvency firm Begbies Traynor.

Image: Brian Forbes (CC BY 2.0)
Image: Brian Forbes (CC BY 2.0)

The figure represents a 23 per cent increase since the introduction of the NLW on 1 April, which set minimum pay for all workers aged 25 and over at £7.20 per hour - a rate which the government intends will rise to over £9 an hour by 2020.

The findings indicate that the wage level's pressure on farming businesses, highlighted by the NFU, is already having an impact across lower-paying industries.

Begbies Traynor partner Julie Palmer said: "For growing numbers of low-wage employers in these sectors, the future looks decidedly uncertain.

"All eyes will now be firmly fixed on the Autumn Statement to see whether the new Conservative leadership will stay committed to George Osborne's original National Living Wage policy or whether, in a post-Brexit world, the government's priorities have shifted."

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