Britain faces a ‘zombie apocalypse’ as high interest rates and energy prices and rises in the minimum wage combine to kill off struggling firms, according to a report.
Analysis by the Left-leaning Resolution Foundation think-tank suggested this ‘triple whammy’ will prove the final nail in the coffin for some, driving unemployment higher.
It is the latest sign that economic gloom under Prime Minister Keir Starmer and Chancellor Rachel Reeves is set to extend into the new year. And it comes as figures from the British Chambers of Commerce (BCC) show business confidence at its lowest in three years.
The Resolution Foundation looked at a trend over recent years in which older, less productive and so-called ‘zombie’ firms have been able to stagger on for longer than in past decades. It said that may be starting to change.
‘Our hunch is that the triple whammy of multi-year increases in interest rates, energy prices and the minimum wage is finally beginning to finish off some of the low-productivity ‘zombie’ firms that managed to stay afloat in the 2010s,’ the report said.
It added this may also be connected to the rise of artificial intelligence, which some businesses are using to try to cut employment costs or operate more efficiently.
Foundation chief executive Ruth Curtice said there were early signs of a ‘mild zombie apocalypse’.
The report argued that while such closures and job losses would be ‘hugely difficult for many of those directly affected’, they could ‘begin to make room for more and better jobs to be created’.
Britain faces a ‘zombie apocalypse’ as high interest rates and energy prices and rises in the minimum wage combine to kill off struggling firms in the latest sign that economic gloom under Prime Minister Keir Starmer
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Yet the prospect of higher unemployment will be hugely worrying at a time when it already stands at the highest level since early 2021.
The BCC poll showed there were ‘more clouds gathering’ over business confidence in the final quarter of last year.
Just 46 per cent of firms expect to see an increase in sales over the next 12 months, down from 48 per cent in the third quarter and the lowest level in three years.
Retail and hospitality businesses are suffering the most, and taxation remains the top concern of those surveyed, the BCC found.
The report also showed that investment levels have fallen for five quarters in a row. And more than half of firms plan to raise prices over the next three months.
The BCC polled 4,600 firms across the UK in November and December.
David Bharier, head of research at the BCC, said: ‘More clouds have gathered over business confidence.
‘A Budget fundamentally light on growth measures did little to boost business confidence, and sentiment overall has worsened since the previous quarter.’
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UK faces ‘zombie apocalypse’ over ‘triple whammy’ of high interest rates, energy prices and rises in minimum wage on struggling firms