Nearly 100,000 firms struggling due to national living wage costs
Nearly 100,000 businesses have been left in financial difficulty after the national living wage sent staff costs soaring, according to research.
Figures from insolvency specialist Begbies Traynor revealed that 97,342 firms are showing signs of financial distress across sectors hit hardest by the introduction of the new minimum wage on April 1.
The rules require employers to pay at least £7.20 an hour to all workers aged 25 and over, and this is set to rise to £9 an hour by 2020.
Begbies said its so-called "red flag" alert has shown that the number of firms struggling financially has surged by nearly a quarter - 23% - over the past six months.
Retailers, hotels, bars, restaurants, sports and health clubs are among those suffering the most since the national living wage came into force.
The report showed nearly 34,000 retailers are in financial stress, followed by 13,772 wholesale outlets, 13,071 transportation and logistics firms, 10,809 bar and restaurants, 10,019 food and drug retailers, 7,803 food and drinks retailers, 5,406 sports and health clubs and 3,347 hotels.
Julie Palmer, partner at Begbies Traynor, said: " Our data clearly indicates a strong link between rising levels of business distress and the implementation of the national living wage six months ago, with an additional 18,000 companies demonstrating troubling signs of insecurity over that period.
"My concern is that many of these struggling businesses may now be forced to take more drastic measures to manage their growing cost base, such as further cuts to staff numbers, reducing bonuses or even passing on the increased costs to the end consumer."