Red Flag alert finds increased levels of ‘distress’
THE number of businesses ‘in distress’ in Yorkshire rose faster than the UK average in the first quarter of 2011, new data shows.
According to the latest Red Flag Alert report by the accountancy firm Begbies Traynor, Yorkshire’s levels of business distress has risen by 17% year on year with 11,576 businesses in the region showing signs of ‘significant’ or ‘critical’ business distress in the first quarter of 2011, up from 9,906 in the first quarter of last year.
The firm’s quarterly Red Flag Alert statistics show that levels of business distress in Yorkshire and the Humber have increased even faster than the UK average year on year figure of 15% in the past quarter.
Across the UK, 186,000 companies are facing ‘significant’ or ‘critical’ financial problems according to figures from January, February and March.
Julian Pitts, of Begbies Traynor in Leeds, said: “Following last quarter’s numbers, showing that Yorkshire remains one of the most distressed areas of the UK, these numbers are unwelcome although not altogether unexpected.”
David Wilson, also of the firm’s Leeds office, added: “The figures show the impact of seasonal trends, retail and hospitality businesses are most likely to fail in the first quarter of any year, but that doesn’t account for all of the increases.
“We are seeing a worrying spread of distress across a great number of business sectors with business to business support and professional services particularly hard hit.
“Nationally, over 15,000 firms in the professional services sector are showing signs of significant or critical problems – partly driven by a stale property and corporate deals market – often the drivers for an active professional services community.
“Compared with the Q1 2010 figure of 9,620 it seems that firms which operate with a high fixed cost base are finding the current market conditions increasingly difficult as their revenues fail to recover and the scope for further cost reductions becomes more limited.”
Business to business support services was the sector hardest hit by ‘significant’ problems with 22% of the instances of distress in the region, followed by the construction sector with 18% of the total and property services with 8%, with the balance shared by other business sectors.
