‘Significant financial distress’ levels rise in North West property sector
New figures reveal an increase in the number of North West businesses suffering ‘significant financial distress’ at the end of the first quarter of 2019.
The latest Red Flag Alert data from Begbies Traynor, which monitors the financial health of companies across the North West, says that 46,973 businesses ended the first quarter of 2019 in significant distress, up by 496 from the previous quarter (46,477).
The property and real estate sector was hardest hit with a six per cent increase in financial distress (4,734) on the previous quarter (4,480).
This means there has been a 16% year-on-year increase in levels of distress in the sector with 649 more property firms now facing significant financial distress compared with the same period last year (4,085).
No other sector in the North West saw such large increases in levels of distress.
In addition, more than 6,000 construction companies in the North West are now suffering significant financial distress. (6,112).
Gary Lee, partner at Begbies Traynor in Manchester, said: “Property and construction businesses have started 2019 facing severe challenges.
“Despite visible evidence of new developments springing up in our towns and cities across the region we are seeing company directors facing a significant squeeze on their margins.
“This sector is a key barometer of the economy and these figures are a warning shot not just for those operating in the property sector but for all other sectors who all rely on a confident, and growth-orientated property sector.
“It will be interesting to see how the sector continues to ride out the ongoing political uncertainty surrounding Brexit, especially in light of the fact the region has seen positive inward investment from all corners of the globe in recent years.”
He added: “Board directors must be proactive with taking action if they feel they fall into this large group of distressed firms.
The sooner cashflow issues are addressed, the more likely it is that a more positive outcome can be achieved through restructuring or negotiating with creditors.”
