Every industry sector in Yorkshire seeing rise in business distress

The number of businesses across Yorkshire showing increased levels of distress is on the rise, according to research published by Begbies Traynor.

The data highlights that the number of firms with financial problems has escalated both year on year and quarter on quarter by the end of 2017 across every industry sector.

The quarterly Red Flag Alert data, produced by business rescue and recovery specialist Begbies Traynor, reveals that in Q4 2017 ‘significant’ distress levels among Yorkshire businesses climbed by 31% compared with the same three months in 2016, affecting 29,744 businesses.

The region also saw a quarterly increase indistress of 9% on Q3 2017.

Across the UK as a whole distress levels are rising even faster, with a year-on-year increase of 36% in Q4 2017, and distress now affecting almost half a million British businesses.

‘Significant’ distress relates to businesses that are showing what are considered to be the early warning signs of financial difficulties, including those that have had minor CCJs filed against them and those displaying a marked deterioration in key financial ratios.

The symptoms are often viewed as a forerunner to more serious or ‘critical’ distress, which refers to businesses that have had winding up petitions or CCJs of more than £5,000 taken out against them.

Yorkshire’s construction industry continued to bear the brunt of regional economic distress with 4,289 businesses suffering from financial difficulties in Q4 2017, a 27% rise on the number affected in the same quarter of 2016.

The region’s retail sector has also been hard hit, with both general, and food and drug, retailers increasingly succumbing to financial problems. A total of 3,034 Yorkshire businesses are now affected in the sector, up 21% on the figure for Q4 2016.

Double digit increases in significant distress affected almost every business sector in Yorkshire in the final quarter of 2017, compared with the final months of 2016.
In the region, sectors which saw the most dramatic year-on-year rises include professional services (55%), leisure and cultural activities (46%) and media businesses (43%).

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “There seems to be a relentless rise in the number of businesses that are experiencing the early signs of distress, and the wide spread of those problems, right across the economy, suggests that there are even tougher times ahead.

“Continuing uncertainty over Brexit, as well as rising interest rates, are taking their toll. It’s worth noting that these latest figures do not reflect the inevitable negative impact of the Carillion debacle, which looks set to affect the many Yorkshire suppliers and subcontractors involved in regional schemes such as the tram-train project to connect Sheffield, Meadowhall and Rotherham.

“With SMEs particularly vulnerable to economic fluctuations, business owners and directors need to proceed with the utmost caution and keep a very close eye on their cash flow. It is always the best course of action to seek professional advice at the first signs of trouble, so that more serious problems can be avoided.”

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →