Almost 11,000 West Midlands businesses in ‘significant distress’

Continuing economic and political uncertainty has left almost 11,000 businesses across the West Midlands region in “significant” financial distress, according to a new report from Begbies Traynor.

The Red Flag Alert data for Q3 2019, which monitors the financial health of UK companies, reveals that nationally, 489,000 UK businesses are in significant financial distress, with the real estate and property, construction, retail and travel sectors the most severely affected. This accounts for 22,000 more businesses in significant distress since the same period last year. Since the EU referendum in 2016, there are now 139,000 more businesses facing financial difficultly – an increase of 40 percent

In the West Midlands, there are significantly more ailing firms in key towns and cities compared to the same period last year. The situation is worsening in Walsall, with the number of companies facing financial difficulties now standing at 1,044 – a 10% year on year increase. This was followed by Dudley, where there was a 7% jump to 506 companies in financial distress. Wolverhampton saw an increase of 6%, while the number of troubled businesses in Stafford and Birmingham are up by 5%.

Construction businesses are most affected, with 1,130 companies across the region in financial distress. In Birmingham, there are more industrial firms experiencing difficulties, with a 10 percent quarter on quarter increase. The professional services sector in Wolverhampton is also among the hardest hit, with an increase of 13% in the number of firms in distress.

Mark Malone, partner at Begbies Traynor in the West Midlands, said: “Three years on from the referendum, the latest Red Flag research highlights just how businesses are struggling as a result of uncertainty. Much investment is on hold as businesses wait to see what the state of play will be post-Brexit and whether the agreements or contracts they currently have in place will still be valid following the expected withdrawal.This is stifling growth both in the West Midlands and nationwide.

“What’s clear is that until businesses and consumers alike are given clarity on the economic situation post-Brexit, stagnation will remain the norm and productivity will continue to suffer.”