Almost 8000 Leicestershire businesses found themselves in ‘significant’ financial distress as summer turned to autumn, according to the figures from independent insolvency firm Begbies Traynor.
However its latest research said things had improved between July and September with a 13 per cent fall in the number of struggling businesses compared to the previous three months.
Begbies Traynor is warning that there are considerable challenges ahead for businesses, including constrained raw material availability, rising inflation, labour shortages, spiralling energy prices and the winding back of government Covid support measures that could yet impact failure rates during the rest of 2021 and beyond.
Nationally, the latest Red Flag Alert research for July to September has recorded 562,550 businesses in ‘significant distress’, a 14 percent fall on the previous three months.
However, the figure is still 15 percent higher than pre-pandemic.
There are also concerns in a steep rise in county court judgments, which are often a bellwether for future insolvency.
It said official data shows there were 21,769 CCJs lodged against companies during the last three months compared to 9,101 a year earlier.
Martin Buttriss, a partner at Begbies Traynor in Leicestershire, said: “The quarterly fall in significant financial distress is welcome news and provides some breathing space for hard hit Leicestershire businesses.
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“However, concerns remain that trading conditions will deteriorate for many companies, with rising CCJ figures an early indicator that some suppliers are running out of patience with customers stretching payment terms.
“Despite the summer economic boom, systematic problems remain, and many businesses face a long-term struggle with repaying government-backed COVID loans.
“However, the combination of inflation, energy costs and labour availability may prove to be the tipping point for some businesses, particularly if they are unable to pass these costs on to their customers.
“These risks, combined with the withdrawal of government support measures and protection, could make for a tough rest of 2021 which could continue into 2022.”