Big rise in North West firms operating in ‘significant financial distress’
Almost 66,000 (65,777) North West firms are now operating under significant financial distress, a 32% increase on the same quarterly period last year, the latest Red Flag report by insolvency specialist Begbies Traynor shows today (October 18).
Distress levels jumped in 20 of the 22 sectors analysed in the North West over the past quarter with the largest leaps seen in Food & Drug Retail (14%), Bars and Restaurants (11%) and Hotels & Accommodation (11%).
A quarterly increase in significant distress of four per cent was reported, lower than the previous quarterly jump of eight per cent in a small ray of light for the region.
Just four key sectors of the North West regional economy now account for almost half (48%) of all firms in significant distress.
Construction (9,338 firms in significant distress), Real Estate and Property (6,722), Support Services (10,063) and Professional Services (5,213) indicate challenges ahead, not just for firms in those sectors, but those in their supply chain.
Nationally, 632,756 companies are now operating in significant financial distress with North West firms making up 10% of this total.
Dean Watson, partner at Begbies Traynor in Manchester, said: “With more than 65,000 firms in our region operating in significant financial distress, no sector is immune to the wide range of challenging scenarios businesses continue to face.
“The effects of inflation on raw materials and labour costs are still having a disastrous impact on many firms, particularly in the construction sector, where we have recently seen high profile administrations that are certain to send a shockwave through subcontractors of all kinds. In speaking to many business owners operating in the sector it’s clear there are major concerns.”
He added: “These latest figures also factor in the sheer level of uncertainty that businesses in the UK face due to factors largely outside of their control.
“The long-anticipated Budget at the end of this month is widely expected to include a range of tax measures, particularly employee-related taxes, meaning that businesses already on the brink could be presented with a fatal blow, or at least require a significant restructuring of their operations.
“The US election is a key international event which can also have an impact in the UK, whatever the outcome.
“It is clear, in the discussions we’ve been having with businesses owners across the North West that uncertainty looms large in the minds of many company directors and these new sets of figures are representative of that.”
