Member Article

Sharp rise in number of Humber firms facing financial distress

The number of firms in the Humber region facing financial problems jumped by almost 10% in the three months to the end of last year, according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist Begbies Traynor.

The report found that in Q4 of 2023 distress had risen by 9.8% since the previous quarter, to affect 2,318 Humber businesses. Year on year the number of distressed firms in the region had also grown by 10%.

However the region’s growth in business distress was less severe than the national average. The UK as a whole recorded a 13.9% climb in distress since Q3 2023 and a 5.4% year-on-year increase.

Andrew Mackenzie, partner at Begbies Traynor in the Humber region, said: “Although Humber businesses seem to be faring better than those in other regions of the UK, unfortunately, this latest rise in distress is a symptom of the fact that businesses that had taken on debt when interest rates were low, and were supported through the pandemic by the Government, are now having to deal with the current reality of high interest rates.

“Wider, and potentially escalating, pressures from the Israel-Gaza conflict are also already starting to be felt, as a result of shipping companies now largely avoiding the Red Sea and the Suez Canal, disrupting the supply chain and increasing transportation costs.

“Weak consumer confidence remains an issue due to the cost-of-living crisis, while rises in the minimum wage, corporation tax, business rates and energy prices are cited as playing a part in the financial problems of almost all of the businesses we deal with.

“The worry is that many of these struggling businesses could be heading towards insolvency: seeking professional advice as rapidly as possible is the best way to avoid the worst happening before it is too late.”

The Humber region’s construction industry recorded the region’s highest number of distressed firms at the end of last year according to the Red Flag Alert data, at 427 and up by 17% since the previous quarter. Distressed real estate and property services firms numbered 166, an increase of 14.8% on Q3 2023, while professional services saw a 7.8% rise in distress, affecting 217 businesses.

This was posted in Bdaily's Members' News section by Ruth Robinson .