Property and real estate sector facing ‘significant distress’

Almost 11,000 businesses across Nottingham, Derby and Leicestershire are in “significant” distress, according to sobering new figures.

The warning comes from the latest Bebgies Traynor Red Flag Alert and shows that real estate and property businesses are most affected.

The stark figures show that almost 2,300 Nottingham companies are in trouble. High interest rates and inflation, alongside weak consumer confidence and rising and unpredictable costs, are the key factors putting considerable financial pressure on businesses across the region, with 2,277 at risk of economic failure. This represents a quarterly increase of 13%, and an annual rise of 4.5%.

Meanwhile, in Derby some 644 companies are at risk of economic failure. This represents a quarterly increase of 3.2%, and an annual rise of 11.4%.

Across Leicestershire, 7,894 companies are facing bleak future, say the figures – a quarterly increase of 13.6%, and an annual rise of 7.1%.

Martin Buttriss, partner at Begbies Traynor in Leicester, said: “As we start 2024, the UK economy is in a difficult position after a challenging 12 months for businesses, who have had to grapple with multiple macro-economic pressures. As a result, we are seeing insolvency rates starting to accelerate.”

The local figures follow-on from last week’s national totals from the latest Red Flag Alert research for Q4 2023, which recorded 539,900 businesses in significant distress. This which was 12.9% higher than Q3 2023 and 5.6% higher than the same period in 2022.

The levels of ‘critical’ financial distress also jumped dramatically in Q4 2023, up 25.9% on the prior quarter leaving more than 47,000 businesses near collapse in the UK at the start of 2024.

Buttriss said that there could be light at the end of the tunnel however. He added: “Later this year, we could see some respite for companies as inflation looks like it may reach more palatable levels, which in turn should result in interest rates starting to decrease from current heightened levels.

“That said, there are no signs of an easy fix and, with geo-political uncertainty continuing to rise and a hike in the national wage around the corner, the backdrop isn’t improving for an economy that is still firmly in recovery mode post-pandemic. For many businesses, I fear soldiering on in this environment will prove to be one step too far.”