Fall in number of firms on critical list, says Begbies
THE UK will narrowly avoid an unprecedented triple dip recession, according to the latest Begbies Traynor Red Flag report.
Ahead of tomorrow’s GDP figures, Begbies Traynor said it latest research for Q1 2013 showed that the recovery of UK plc was continuing, with a 34% decline in ‘Critical’ financial distress among UK businesses compared to Q1 2012.
Critical is defined as either having a court action against the firm, a winding-up petition, or having entered a company voluntary arrangement.
Across all sectors, UK businesses experiencing ‘Critical’ financial problems reduced from 5,000 in Q1 2012 to 3,283 in Q1 2013, indicating the UK economy has turned a corner.
However, it said this positive picture, led predominantly by improvements in the UK’s vital business services sector, masked a “patchy recovery” with sectors reliant on the consumer economy (general retail, leisure and media) as well as real estate, witnessing an increase in financial distress for the period.
Julie Palmer, partner at Begbies Traynor, said: “The year on year improvement reflects the continued forbearance and benign monetary conditions facing UK businesses today, combined with an improving credit environment, albeit primarily for larger corporates. Business confidence is slowly returning in the form of greater business spending on both services and investment.”
On a quarterly basis, the data reveals an 8% increase in ‘Critical’ financial distress from 3,044 in Q4 2012. Begbies said this increase could largely be attributable to seasonal factors such as the propensity for creditors and directors to take action ahead of having to file accounts for the new tax year.
However, certain consumer-facing sectors, including leisure (up 81%), hotels (up 63%) and general retail (up 27%) have been impacted by the unseasonably cold weather experienced throughout the first quarter of this year.
