Over 12,000 East Midlands companies in ‘significant’ distress

Over 12,000 companies across Nottingham, Derby and Leicester found themselves in “significant” financial distress during the first quarter of 2022 (January-March), according to the latest figures from Begbies Traynor’s Red Flag Alert, which monitors the financial health of British companies.

However, these figures represent a substantial drop on the total identified as being in significant distress 12 months ago.

In Nottingham, some 5,004 companies were in distress, a 19% year-on-year drop and 2% quarterly drop. The sector particularly struggling include Sectors leisure & cultural (up 8%) and food & beverages up 7% on the past quarter.

Derby saw 2,159 in companies in distress, a 20% year-on-year drop and a 2% quarterly drop. Leisure & cultural and real estate & Property were both up 7% on the past quarter.

In Leicester, 4,921 in firm were struggling, a 19% year-on-year drop and 1% quarterly fall. Financial services were up 4% and support services up 7% on the past quarter.

Ric Traynor, executive chairman of Begbies Traynor, said: “Inflation has become a global issue, not just a domestic problem. The effects of increasing costs are now starting to take their toll on businesses and consumers alike. For the first time in more than a decade, inflation is the prime concern for businesses.

“This could mean that companies which have just been surviving, being kept alive only by government support, finally succumb to the inevitable.

“Additionally, consumer demand is likely to slow markedly as cost pressures pile up ahead of the anticipated increase in energy costs in October, and families reduce their appetite for spending accordingly. If these pressures take their toll on both corporate and personal finances, it could be particularly difficult in the latter quarters of this year.”