North West company distress levels rocket by more than a third in just 12 months
A new report issued by Manchester-based insolvency expert, Begbies Traynor, today (July 22) reveals that levels of significant financial distress among businesses in the North West have soared by almost 40% in just 12 months.
In the second quarter of 2024, the number of firms in the North West operating in ‘significant’ financial distress was 63,454, according to the research. This is a year-on-year increase of 39%, up from 45,579.
This annual percentage increase in the region is above the national average of 37% as more than 600,000 firms across the country face financial challenges (601,950).
This latest data is sourced from the Begbies Traynor Red Flag dataset which tracks key factors behind company distress and failure rates.
‘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 figures indicate that people remain adamant in pulling back spend on food, clothing and leisure as families’ spending power continues to shrink.
Sports and Health Clubs saw a 49% increase in distress (up to 1,252 businesses), General Retailers a 48% increase (to 5,119 shops) and the Bar & Restaurant sector saw a 41% hike in distress (to 1837 outlets).
By far the largest volume of distressed businesses are found in the quartet of what are widely considered to be the core economic sector hubs of the North West region: Construction, Real Estate, Support Services and Professional Services which, together, make up almost half (49%) of the total (30,786) number of significantly distressed firms.
Gary Lee, partner at Begbies Traynor in Manchester, said: “These are sobering figures indeed, but those in the thick of doing business in our region will not be surprised. They recognise that things are extremely tough, not only for their own firm but for those they are doing business with every single day.
“The figures relate to the final quarter of the previous government and naturally, since July 4, and the election of a new regime, business owners will now be anxiously looking for any new business-friendly measures to be implemented quickly so they can recover and prosper in the second half of the year.
“There is no hiding the fact that a vast number of consumers are still actively seeking to reduce household spend on a daily basis. Inflation and wage stagnation has a huge impact on the fortunes of businesses operating in every sector of our regional and national economy.”
He added: “It is deeply concerning that the North West’s ‘golden quartet’ of sectors make up nearly half of all the distressed businesses in the region and keeping a close eye on how they progress in 2024 will be absolutely essential for all of us.”
