The number of firms in the NorthWest operating under “significant financial distress” has risen by almost a third on last year – with analysts from Begbies Traynor saying there is increasing pressure on the retail and hospitality sectors.
The study from Begbies Traynor’s Red Flag Alert showed 65,777 firms in the region were operating under significant distress in the third quarter of the year. The index measures “sustained or marked deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth”.
Distress levels rose in 20 of the 22 sectors studied in the North West over the last quarter with the biggest leaps in food & drug retail (14%), bars and restaurants (11%) and hotels & accommodation (11%).
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Four sectors make up almost half (48%) of all firms in significant distress – construction (9,338 firms), real estate and property (6,722), support services (10,063) and professional services (5,213).
Distress levels rose 4% on Q2, lower than the previous quarterly jump of 8%, in what Begbies Traynor called “a small ray of light for the region”.
Nationally, 632,756 companies are now operating in significant financial distress.
Dean Watson, partner at Begbies Traynor in Manchester, said: “With more than 65,000 firms in our region operating in significant financial distress no sector is immune to the wide range of challenging scenarios businesses continue to face.
“The effects of inflation on raw materials and labour costs are still having a disastrous impact on many firms, particularly in the construction sector, where we have recently seen high profile administrations that are certain to send a shockwave through subcontractors of all kinds. In speaking to many business owners operating in the sector it’s clear there are major concerns.
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“These latest figures also factor in the sheer level of uncertainty that businesses in the 海角视频 face due to factors largely outside of their control. The long-anticipated Budget at the end of this month is widely expected to include a range of tax measures, particularly employee related taxes, meaning that businesses already on the brink could be presented with a fatal blow or at least require a significant restructuring of their operations.
“The US election is a key international event which can also have an impact in the 海角视频 whatever the outcome. It is clear, in the discussions we’ve been having with businesses owners across the North West that uncertainty looms large in the minds of many company directors and these new sets of figures are representative of that.”
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