More than 13,000 businesses in the West Midlands were in ‘significant’ financial distress during the second quarter of 2022, the latest Begbies Traynor’s “Red Flag Alert” report has revealed.
The region saw the number of businesses struggling between Q1 and Q2 2022 hold steady at 13,385 - a 13 percent year-on-year decrease on the same period in 2021, as costs continue to rise.
Some parts of the region, however, saw a rise in companies in distress between Q1 and Q2. Walsall saw a 4% rise, while Birmingham saw a 1% rise and Wolverhampton's figures were flat.
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The property and real estate sector was particularly hard hit during the quarter, with rises in the number of businesses in distress across the region. In Dudley, the manufacturing sector saw a 21% increase.
Nationally, the latest Red Flag Alert research for Q2 2022 recorded 582,452 businesses in significant distress. Companies were impacted by rising inflation, higher labour, material and energy prices, and faltering consumer and business confidence.
In a possible early warning sign for future insolvencies, there were 46,235 County Court Judgements in the first six months of 2022, up 5% on the first quarter. That compares to 59,042 CCJs during the whole of 2021.
Mark Malone, partner at Begbies Traynor in the West Midlands, said: "Having emerged from the pandemic, companies in the West Midlands were hoping for an economic boom but that has simply fizzled out, as a combination of economic issues have taken their toll, reducing both business and consumer confidence.
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"Indeed, rising insolvency rates, combined with our own anecdotal evidence from speaking to the directors of distressed companies, highlight the impact of rising costs on businesses.
"Many are fighting on, but the environment is only going to get worse, not better, at least until next year. I fear that it will be a troublesome autumn as businesses which have struggled for so long are finally overwhelmed.
"That is why it is so important that any businesses facing financial difficulties, for whatever reason, should seek professional advice in order to fully understand the options available."