The North East has seen a recent 25% hike in companies battling insolvency issues – with construction, property, retailers and support service businesses struggling the most.
The latest Red Flag Alert data has been published by business rescue and recovery specialist Begbies Traynor, which show how the third quarter of 2023 saw a 25% increase in the levels of regional businesses seeing advanced financial difficulties since the previous quarter. Figures show that 658 businesses in the region saw advanced or ‘critical’ distress, and there was a quarter-on-quarter increase of just under 6.2%, 8,480 businesses, which are seeing early or ‘significant’ distress. Early distress refers to businesses showing deterioration in key financial ratios and indicators, including those measuring working capital, contingent liabilities, retained profits and net worth.
According to the latest Red Flag Alert, construction, real estate and property services, support services and general retailers saw the highest numbers of North East businesses in critical distress. In the North East, 119 construction firms experienced advanced financial problems in the period, an increase of 58.7% since the previous quarter.
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Real estate and property services firms accounted for 94 critically distressed businesses in the region, up 113.6% on Q2 2023, while support services added a further 91, up 24.7%, and general retailers another 51 businesses, up 41.7%. The sectors in the North East which saw the greatest falls in critical distress since the previous quarter were food and beverage, which was down by 50%, bars and restaurants, down by 37.2%, printing and packaging and utilities which were both down by 33.3%, and telecoms and IT which dropped 30.3%.
Across the 海角视频, critical business distress increased by 25% on the previous quarter and by almost 2% year-on-year, to affect 37,722 firms nationally. Almost half a million companies – 478,176 – nationwide saw incidences of significant distress rise.
Andrew Little, partner for Begbies Traynor in the North East, based in Newcastle, said: “There’s no doubt that businesses both in the North East and across the 海角视频 are facing unprecedented pressure with high inflation rates continuing to bite, along with spiralling operating costs and a drop in customer demand. For many, the cost of debt is proving to be the final straw, pushing them to the very edge of failure.”
Partner Gillian Sayburn added: “Many companies are particularly vulnerable at the current time as they continue to fight to recover from the twin challenges of the pandemic and the cost of living crisis. Consequently, we are seeing levels of both early and advanced distress escalating since the last quarter. We once again encourage directors of businesses which are starting to suffer from financial problems to turn to insolvency professionals like us for advice as soon as they can, before problems spiral out of control.”
The Red Flag Alert research comes as latest nationwide statistics show that there were 6,208 company insolvencies registered across England and Wales in the third quarter of 2023 – a rise of 10% compared to the same quarter in 2022, though 2% lower than in the second quarter of 2023.
More than one in 200 active companies in the 海角视频 went into insolvent liquidation in the year to end of September. The last two quarters saw the highest quarterly insolvency numbers since 2009 and the highest numbers of creditors’ voluntary liquidations since records began in 1960.