North West business distress on the rise

Businesses in the North West and across the country are continuing to struggle, with the number showing early signs of distress in the last three months of 2017 increasing markedly since the same period the previous year, and once again creeping up quarter on quarter.

According to the quarterly Red Flag Alert data released by Begbies Traynor, 34% more businesses in the North West (representing 48,338 companies) experienced ‘significant’ financial distress in the last quarter of 2017 compared with the last three months of 2016.

This type of early distress which relates to businesses with minor CCJs filed against them, or those showing a marked deterioration in key financial ratios, also rose quarter on quarter by 9%.

The regional picture is reflected across the UK which saw a 36% year on year increase in businesses deemed to be in ‘significant’ distress; along with a 10% rise quarter on quarter.

Looking at the different sectors, most in the North West once again saw a double digit rise in year on year levels of ‘significant’ distress with some seeing increases of more than 30%.  Among those which seem to be suffering most are financial services (50%); media (48%); support services (47%); telecommunications (46%); and professional services (44%).

In terms of ‘critical’ distress, which monitors the more advanced symptoms of financial problems such as businesses which have had winding up petitions or county court judgements of more than £5,000 taken out against them, the latest data is more encouraging with a fall of 23% in the North West compared with the last quarter of the previous year.

This compares with the UK wide figure which also fell, but at the lower rate of 14%.  The Red Flag Alert research also revealed a slight decrease since Q3 of 2017 with 2% less businesses in the region at ‘critical’ risk, compared with a rise of 5% nationally.

Gary Lee, partner at Begbies Traynor’s Manchester office, said: “With ongoing uncertainty over Brexit, as well as rising interest rates, the UK economy remains somewhat fragile and consumers are keeping a tighter hold on the purse strings.  This is, of course, having a knock-on effect on many businesses and already we are seeing a marked increase in the number showing early signs of distress which indicates that, for many sectors, there are still tough times ahead.

“As ever in such a challenging climate, our advice to directors is to keep a close eye on their cash flow and proceed with caution – always seek professional advice at the first signs of trouble when the most options will be available.”

Click here to sign up to receive our new South West business news...
Close