Fresh data released today by Begbies Traynor reveals the number of North West firms who have started 2024 on the brink has now surged past 50,000.
In Q4 of 2023, the number of firms in the North West operating in ‘significant’ financial distress was 55,928 according to the research. This is a year-on-year increase of 6.78% (up from 52,375) and an alarming quarterly jump of 12.18% (up from 49,896).
This latest data is sourced from the Begbies Traynor Red Flag dataset which tracks key factors behind company distress and failure rates.
‘Significant distress’ refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth.
The biggest double-digit leaps in distress compared to the previous quarter were seen in Real Estate and Property Services (25%), Financial Services (23%) and Health & Education (17%)
The largest volume of distressed businesses are found in the quartet of key economic sector hubs in the North West region: Construction, Real Estate, Support Services and Professional Services which, together, make up more than half (51%) of the total (28,687) number of significantly distressed firms.
Gary Lee, partner at Begbies Traynor, said:
“2024 has been a challenging start for SMEs in our region. There’s no doubt that the build-up of pressure from last year continues to have a major impact and this latest data demonstrates the size of the problem for businesses in the North West.
“Recent inflation figures announced compound the threats even further for business owners struggling to stay on top of things as those in their supply chain pass greater costs on in order to survive.
“The fact that more than half of these companies in significant distress operate in the traditionally strong sectors of construction, property, professional and support services is of grave concern for everyone doing business in these areas.
“With a General Election looming later this year, it is feasible we could see further support for businesses being announced in the next Budget. It remains to be seen whether this would be too little too late for many of the firms in our region included in our numbers.
“These new figures are a stark reminder for company directors to act quickly and decisively in order to generate more options for rescue than if they bury their heads in the sand.”
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