Insolvency-related activity and profit warnings from South West firms have shot up, a grim set of reports into the region鈥檚 economy have found.
Research has found the South West saw the biggest increase in liquidator and administrator appointments and creditors鈥 meetings across the whole of the country during the last financial quarter.
Almost 400 cases were recorded by Creditsafe for restructuring trade body R3, a 23% jump from the second quarter after 鈥渟teadily increasing鈥 since May.
Charlotte May, R3鈥檚 chair in the region, said a 鈥渕ultitude of pressures鈥 were impacting businesses at the moment, including inflation, energy price increases and salary demands.
Ms May said: 鈥淯nfortunately, this means that many directors are now having to make tough decisions about their long-term future, and with costs only expected to rise further in the coming months, it is likely that this increase in insolvency-related activity is only the beginning.鈥
Meanwhile professional services firm EY heaped on further misery by reporting that listed companies in the South West had issued five profit warnings in the third quarter - up from one a year earlier.
Nationally, 86 profit warnings were issued - the third-highest third quarter total since the global financial crisis in 2008.
EY said there had been a 鈥渟ignificant increase鈥 in the number of warnings from consumer-facing companies, with more than half prompted by rising costs, and almost a quarter costing 鈥渓abour market issues鈥.
Lucy Winterborne, EY-Parthenon partner in turnaround and restructuring strategy, said: 鈥淏usinesses in the South West 鈥 and indeed the rest of the country 鈥 are facing an unprecedented combination of headwinds including rising costs, slowing demand and excess supply, making it increasingly difficult to balance competing priorities.
鈥淭his quarter, we have seen a significant increase in companies issuing their third or more warning in a 12-month period. With so many uncertainties in the outlook it鈥檚 vital that companies develop resilience and demonstrate a clear understanding of how their business will adapt under different geopolitical and economic scenarios.鈥
R3 urged company directors worried about the health of their business to seek advice from a qualified professional 鈥渁s early as possible鈥.
Ms May added: 鈥淒irectors who ignore a worsening position or fail to take advice run the risk of incurring personal liability if they breach their duties as directors, even if they are not active directors of a company.鈥
Read next:
- Prime Minister Rishi Sunak says mistakes have been made
- Rishi Sunak appointment must 'mark start of real action', say business leaders
- South West businesses blame 'hare-brained' mini-Budget as recession risk rises
- Professional services firm EY hires 52 young people in Bristol
Like this story? Why not sign up to get the latest South West business news straight to your inbox.
