The number of Yorkshire businesses affected by financial distress fell in the early part of the year but there are suggestions the improvement is the "calm before the storm".
Significant or early-stage business distress fell 12% in the first three months of 2025, impacting 40,000 firms in Yorkshire and almost 6,000 fewer than in the final part of 2024. The figures from Begbies Traynor Red Flag Alert also showed distress was growing year-on-year - 6% on the first quarter of 2024.
Food and drink producers experienced a 12% quarterly fall in distress levels and 4% year-on-year, while industrial transportation and logistics levels were down 11% since last quarter and 7% year-on-year. Manufacturing firms saw a 17% decrease on the quarter and 3% year-on-year, while printing and packaging was down 11% since last quarter and 13% year-on-year.
But the readings came before US President Donald Trump's "liberation day" announcements including the introduction of tariffs which sent shockwaves through the global economy. A series of gloomy surveys and predictions have since come out, including this week's report from the International Monetary Fund which suggests the º£½ÇÊÓƵ economy will be among the hardest hit by President Trump's measures, as well as data showing º£½ÇÊÓƵ consumer confidence was hit by the announcements this month.
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: "There are signs that the º£½ÇÊÓƵ economy was making positive progress in the first three months of the year, with the rate of inflation dropping to 2.6% in March and better growth than had been predicted - and our Red Flag data bears that out. But, with Trump’s global tariffs threat now a reality, that fragile optimism now looks to have been the calm before the storm.
"As long as there’s heightened uncertainty over exactly how the escalating trade war will hit our economy, businesses in Yorkshire and across the º£½ÇÊÓƵ will unfortunately not come out of this unscathed, with SMEs likely to find themselves least resilient in the face of economic fallout."
He added: “Inflation is forecast to increase sharply next month, with household bills going up and that in itself will inevitably suppress consumer spending. But meanwhile, as global turmoil builds, there’s huge uncertainty over whether Chinese imports that had been destined for the US market will make their way into the º£½ÇÊÓƵ, and that’s combined with severe disruption to supply chains impacting, among many others, the very sectors that, in Yorkshire, were showing signs of recovery: manufacturing, print and packaging and industrial logistics.
"These are certainly times in which businesses would do well to batten down the hatches and, as ever, our advice to owner-managed businesses who feel they are facing apparently insurmountable financial challenges is to seek professional advice sooner rather than later. You may find there are more options out there than you think to turn around and stabilise a struggling business."
