‘Significant’ financial distress affecting more than 28,000 Yorkshire businesses
The number of Yorkshire companies in ‘significant’ financial distress during Q3 2018 has increased by 4% compared to the same quarter last year, according to the latest Red Flag Alert research data from Begbies Traynor, the UK’s leading insolvency firm.
Red Flag Alert, which monitors the financial health of UK companies, reveals that during Q3 2018, 28,424 Yorkshire businesses were in ‘significant’ distress, an increase of more than 1,000 on Q3 2017. However distress has fallen 1% since Q2 2018, indicating some signs of growing business stability.
Across the UK, 469,006 companies were in ‘significant’ distress – an increase of almost 21,000, or 5%, on Q3 2017. ‘Significant’ financial distress refers to what are considered to be the early warning signs of more serious financial difficulties, including firms that have had minor CCJs filed against them and those showing a marked deterioration in key financial ratios.
In Yorkshire, as in the country as a whole, this summer’s good weather helped to boost several sectors, including food and drug retail, which saw distress fall by 4% year on year and by 2% since Q2 2018, and bars and restaurants (down 3% year on year and 1% quarter on quarter). The region’s printing and packaging sector experienced a 4% fall in distress and automotive saw a 3% drop on the Q3 2017 figures.
Other sectors failed to benefit from the seasonal optimism however, and since Q3 2017 distress rose by 11% in the Yorkshire hotel and accommodation industry, by 11% in sport and health, and by 10% in food and drink production.
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “This summer has been a feel-good few months for the economy, but as we move into autumn and winter consumers are tightening their purse strings and retail sales, particularly of food, are declining.
“Coupled with falling house prices and inflation across essentials such as fuel and energy, the effect has been to increase consumer caution, particularly as the economic confusion around the outcome of any Brexit deal persists.”
He added: “As ever, businesses that are quick to adapt in changing times will be the ones that thrive, however all businesses need to focus on the fundamentals – innovation, sales and financial management, as these will be key to staying ahead of both domestic and international competition.”