Financial distress levels of North West firms shoot up by a third in 12 months
Levels of significant distress among North West companies have soared by 33% in the past 12 months.
The latest Red Flag report issued by Manchester-based insolvency expert, Begbies Traynor, today (April 26), revealed that the number of firms in the region operating in significant financial distress during the first quarter of 2024, was 58,599, up from 44,052 at the same point last year.
This percentage increase is above the national average of 30% as more than half a million (554,554) firms across the country face financial challenges.
Significant distress refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth.
The largest double digit percentage leaps in significant distress over the past 12 months have been seen in sectors being challenged by the general public cutting back on their own personal spending.
Sports and Health Clubs saw a 56% increase in distress (up to 1,164 businesses), Food & Drug Retailers a 47% increase (now 1,709) and General Retailers a 47% increase (to 4,669 outlets).
The largest volume of distressed businesses is found in the quartet of key economic sector hubs in the North West region: Construction, Real Estate, Support Services and Professional Services which, together, make up almost half (49%) of the total (28,730) number of significantly distressed firms.
Gary Lee, partner at Begbies Traynor in Manchester, said: “These figures clearly demonstrate the huge challenge that businesses are facing in enticing people to part with their hard-earned cash, not only on discretionary items like clothing and gym memberships, but everyday necessities like food.
“The fact that almost half of all businesses operating in significant distress are in four of the key economic sectors in the region is alarming and will obviously have a knock-on effect throughout the remaining 18 sectors we analysed.”
He added: “There are no indications the situation is going to get dramatically better for businesses as we progress through 2024.”
