The Big Four firm predicts a 15% surge in insolvencies over the next 12 months, with small businesses, particularly in catering and hotels, facing the greatest risk.

Barret Kupelian, PwC’s chief economist, attributes this alarming trend to a combination of factors, including high interest rates, low economic growth, and soaring energy prices. The manufacturing, transport, and storage sectors are also identified as being under threat.

Mr Kupelian said: “Following the post-pandemic challenges, 2024 will be the year the UK turns a page. Inflation returning closer to normal levels, progress on regional growth and real incomes improving provides optimism for the year ahead, despite the legacy of higher consumer prices and rising housing costs.

“There remain many ‘known unknowns’ in 2024 that can change the trajectory of the UK, such as volatility in global energy prices due to the continued middle eastern conflict and the forthcoming General Election, however, overall the outlook is far rosier for 2024 than expected twelve months ago.

“2024 will also be a major year for sport to look forward to with the Euro football tournament, T20 Cricket World Cup and, of course, the Olympic Games in Paris. Our modelling indicates that Team GB will build upon its strong performance since London 2012 as it climbs to third place in the total medal tally.”

Since December 2021, the Bank of England has raised interest rates from a historic low of 0.1% to a 15-year high of 5.25% to combat inflation. Despite hopes for a fall in rates as inflation cools next year, PwC’s forecasts paint a bleak picture, indicating that companies will continue to grapple with elevated borrowing costs.

The report highlights the vulnerability of small businesses, with one in four catering and hotel companies at risk. This is particularly concerning for Scotland’s business landscape, given the significant presence of hospitality and tourism-related enterprises.

Insolvency levels are expected to surpass those during the 2009 financial crisis, with PwC projecting 26,000 insolvencies by the end of 2023.

High-interest rates impact businesses by increasing borrowing costs, making it harder to secure new funding, and dampening consumer spending. Even as inflation is expected to decrease, the aftermath of the pandemic continues to weigh on businesses, with prices remaining elevated. The ongoing squeeze from interest rates is likely to depress spending throughout the coming year.