FirstFT: US company bankruptcies hit 14-year excessive

At the moment’s agenda: Nato official warns “stupid” buyers; Apple plans to broaden Information app; EIB fears “reputational disaster”; psychological well being toll on “sandwich carers”; and the way a lot sick pay is an excessive amount of?

Good morning. US company bankruptcies have hit their highest stage for the reason that aftermath of the worldwide monetary disaster. Right here’s what we all know.

What the information says: Not less than 686 US firms filed for chapter in 2024, up about 8 per cent from 2023 and better than any 12 months for the reason that 828 filings in 2010, in keeping with information from S&P World Market Intelligence. Out-of-court manoeuvres searching for to stave off chapter additionally elevated final 12 months, outnumbering bankruptcies by about two to 1, in keeping with Fitch Scores. Consequently, precedence lenders to issuers with at the least $100mn of mixture debt skilled the bottom restoration charges since at the least 2016.

What’s inflicting this? Shopper demand has waned because the Covid-19 pandemic stimulus ebbed, hitting firms that depend on discretionary shopper spending notably laborious. Get together provide retailer Get together Metropolis, which submitted its second chapter submitting in late December, stated it will shut down its 700 shops nationwide after struggling “in an immensely challenging environment driven by inflationary pressures on costs and consumer spending, among other factors”.

“The persistently elevated cost of goods and services is weighing on consumer demands,” stated Gregory Daco, chief economist at EY. The burden is particularly heavy for households on the decrease finish of the revenue spectrum, “but even in the middle and on the higher end, you’re seeing more caution”. Right here’s the complete report.

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Right here’s what else we’re protecting tabs on as we speak:

5 extra prime tales

1. A senior Nato official has warned western ranking businesses, banks and pension funds are being “stupid” in shunning defence investments. Admiral Rob Bauer, outgoing chair of the alliance’s navy committee, instructed the Monetary Instances that insurance policies that bar investing in armaments based mostly on environmental, social and governance issues had been out of date.

2. Unique: The European Funding Financial institution fears a “reputational disaster” if the EU applies new sustainable reporting guidelines, which this 12 months require a taxonomy classifying inexperienced investments, in keeping with leaked inside correspondence. Right here’s what the memo reveals in regards to the threat to the multilateral lender’s climate-friendly credentials.

3. A rising variety of passengers are bypassing congested hub airports and flying instantly, as airways reap the benefits of new fuel-efficient jets to redraw their networks. Learn extra on how advances in plane know-how have put the “hub and spoke” mannequin beneath strain.

4. UK retail gross sales spending progress was “minimal” and under the speed of inflation within the closing three months of 2024, in keeping with figures revealed by the British Retail Consortium. The info signifies shoppers remained cautious in what is usually the busiest interval of the 12 months for retailers. Learn the remainder of the evaluation right here.

5. Apple is stepping up plans to broaden its Information app, because the US tech group turns into an more and more highly effective drive in driving revenues throughout the publishing trade. The platform, which reaches about 125mn individuals each month within the US, Canada, UK and Australia, kinds a part of the iPhone maker’s efforts to tie individuals to its merchandise. Right here’s the way it plans to scale up.

The Huge Learn

Kemi Badenoch, the brand new chief of Britain’s Conservatives, enters 2025 with what needs to be a tempting goal in her sights: Labour Prime Minister Sir Keir Starmer, whose ballot scores have fallen quicker than any premier in current reminiscence since his election triumph final July. Can she unite the appropriate to defend the Tories’ place because the UK’s most important opposition social gathering?

We’re additionally studying . . . 

Chart of the day

Germany’s illness absence charges — already excessive by worldwide requirements — seem to have elevated sharply, based mostly on information from medical health insurance firms. The stark distinction with the UK is revealing about sick pay coverage trade-offs. Sarah O’Connor asks: how a lot sick pay is an excessive amount of?

Take a break from the information

Mole hunts, lacking billionaires and DIY spies — Adam LeBor critiques the finest nail-biting new thrillers, together with David McCloskey’s newest novel that cements his place within the prime division of spy writers.