Fewer firms on Begbies’ critical list

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FEWER North West businesses are in serious financial distress, according to the latest Red Flag Alert research from accountancy group Begbies Traynor.

The report suggests businesses across the UK enjoyed a fourth quarter bounce thanks to Christmas trading and improving job security and house prices.

The Red Flag report classifies businesses in distress as either significant – defined as a court action pending or poor or out-of-date accounts – or critical – those with County Court Judgments totalling £5,000 or more, a winding-up petition or being in a voluntary arrangement.

Year-on-year, the number of North West businesses on the critical list fell by 16% to 325, while it declined by 3% from the third quarter.

Nationally, the number of critical businesses fell by 1% to 2,933 on a quarterly basis and by 3.6% compared to the same period in 2012. But numbers in the less serious, ‘significant’ category increased – up 3% to 224,579.

The quarterly improvement was recorded across most sectors with the biggest change in hotels, food retailing, financial services and professional services. However, some areas saw an increase in critical firms such as travel and tourism, up 34%, sports and recreation, up 69% and printing and packaging up 17%.

Begbies’ chairman Ric Traynor said: “This quarter’s Red Flag statistics show that the economy is still moving in the right direction, as ‘critical’ distress levels are down for the third quarter running, across almost all regions of the UK. With businesses feeling more confident about their outlook for 2014, so too are consumers, thanks to strengthening property prices, improving job security and wage inflation.

“While this positive sentiment is encouraging, we cannot overlook the fact that a large population of businesses continue to suffer from ‘significant’ distress resulting from funding, management or accumulated debt issues. The next year will be a key period for these businesses to either sort out their problems and prosper or finally reach the end of the road.”

Begbies said there was a spike in new incorporations last year, up to 518,000 from 352,300. These businesses represent 20% of the 2,680,000 total.

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