More than 2,000 Stoke-on-Trent businesses started the year in ‘significant’ financial distress, a new report has found.
New figures from insolvency firm Begbies Traynor revealed that an increasing number of the city’s firms were struggling in the first three months of the year – almost 40 per cent more than in 2020.
The Reg Flag Alert research found that 2,186 companies reported being in ‘significant’ financial distress in January, February and March.
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This is 17 per cent up on the previous three months and 38 per cent up on the same period last year.
In Stoke-on-Trent, businesses operating in the industrial and health and education sectors faced greater difficulties than others, both increasing by 34 per cent between the last quarter of 2020 – October, November and December – and the first quarter of 2021.
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But Diane Dunion, partner at Begbies Traynor in Stoke-on-Trent, believes that the city’s businesses have what it takes to recover.
She said: “This huge increase in financially distressed companies in Stoke-on-Trent shows that the last 12 months have undoubtedly been some of the hardest that many businesses have encountered.
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“We must remember that this is no ordinary recession and while some businesses have had significant assistance from central government, large parts of the economy have had to function with their doors closed to their main source of custom.
“With the reopening of the economy over the next few months, there is a lot of work for many businesses to do, but those that have the talent to thrive in normal circumstances will find a way to adapt.
“The pandemic has changed customer expectations and behaviours potentially permanently, and those businesses that were profitable pre-Covid-19, and can demonstrate a strong recovery plan, can survive.”
Nationally, the research recorded 723,000 businesses in ‘significant distress’ – up 42 percent year-on-year.
This 15 per cent rise represents the largest numerical quarterly increase in financially distressed companies since the Red Flag Alert research launched in 2014 – equivalent to 93,000 ailing businesses.