North West sees rise in levels of financial distress among businesses

Almost 50,000 companies in the North West experienced significant financial distress in the final quarter of 2019, according to fresh Red Flag Alert data published today by Manchester-based insolvency firm Begbies Traynor.

Significant financial distress includes firms with minor CCJs (County Court Judgments of less than £5,000) filed against them.

The latest data shows the region registered 47,653 companies in this bracket.

Of the 22 business sectors researched by Begbies Traynor, 14 of them saw a rise in significant financial distress in the final quarter of 2019.

Real estate & property saw the biggest year-on-year increase of 15% – 5,181 compared with 4,491 at the same time the previous year.

Sports & health clubs followed with a nine per cent increase, from 867 to 949 companies, and leisure & culture saw a five per cent increase from 999 to 1,047 companies.

The regional rise in distress reflected the national picture which also saw a three per cent rise.

Almost half a million businesses in the UK were in significant financial distress at the end of 2019 (494,045).

Gary Lee, partner at Begbies Traynor, said: “Uncertainty about the outcome of the General Election in the final quarter of 2019 may have been a key factor in forcing many companies into this position.

“Now that the Government is settled for the next five years and we know Brexit will happen on 31 January, there is, at least, some kind of political stability for companies to build on.

“Business owners will still be hoping for some highly-positive news in the most eagerly-anticipated Budget for a number of years in March. Tax breaks and other financial incentives are keenly expected.

“It is concerning that, in a region like ours which prides itself on its sporting and cultural heritage, that we’ve seen large increases in distress in these particular sectors.

“We know that many football clubs in our region outside the Premier League, for example, are finding it challenging to survive, but we now know that other sporting and cultural pursuits across Liverpool, Manchester and Lancashire are clearly feeling the pinch. This should be a concern not just for business owners and investors but fans, politicians and the general public at large.”

He added: “If the trend we’ve detected in our latest research continues during 2020, we could, for the first time, see more than 50,000 companies in the North West region fall into significant financial distress.”