As Brexit deadline approaches 30,000 Yorkshire businesses now in financial distress, up by one third since EU referendum
Business distress has risen by 33% in Yorkshire since the EU referendum in June 2016, according to the latest research from Begbies Traynor, the UK’s leading independent insolvency firm.
Published today (17 October 2019,) the latest quarterly Red Flag Alert data, which monitors the health of UK companies, shows that a total of 29,410 firms in Yorkshire were in significant financial distress by the end of September, compared with 22,161 distressed businesses at the time of the EU referendum.
Significant distress refers to companies with relatively minor financial problems such having CCJs of less than £5,000 filed against them, or showing a marked deterioration in key financial ratios and indicators. It is often viewed as a warning of more serious financial problems to follow.
Across the UK as a whole financial distress has risen by 40% since the referendum three years ago, affecting 489,000 businesses.
With the lowest September consumer spending figures on record and the housing market remaining subdued, customer-facing sectors have been particularly badly affected as confusion and uncertainty over Brexit continue.
The real estate and property services sector, both in Yorkshire and across the UK as a whole, has been especially hard hit with a 13% rise in the number of Yorkshire property businesses suffering significant distress since Q3 2018. By September a total of 2,878 Yorkshire property firms were undergoing financial difficulties.
Consumers’ reluctance to spend has also affected bars and restaurants across Yorkshire: a total of 1,331 businesses in the sector were in financial trouble in Q3 2019, a 10% rise on the same period in 2018 and 5% more than in Q2 2019.
According to the Begbies Traynor research, construction remains the most severely distressed sector. By Q3 2019, 4,202 of Yorkshire’s construction firms were in financial distress, a 2% increase on the previous year.
By contrast, travel and tourism was one of the few Yorkshire industries to see distress levels fall, with a 6% drop in distress year on year and quarter on quarter, and 174 companies in trouble.
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “The uncertainty and weak consumer spending in the wake of the EU referendum that was held more than three years ago now is having a cumulatively devastating effect right across our economy.
“While the low pound, and perhaps the success of large-scale events such as the UCI World Championships last month, has helped to generate some good news for tourism in the region, overall the picture is far bleaker.
“Businesses are increasingly frustrated that they cannot plan for the future, and that is putting a brake on the whole economy. For some, especially small companies, these kinds of setbacks are too much to bear and can lead to very serious problems indeed. I’d advise any business owner whose firm is in trouble to seek advice as soon as possible in order to avert potential disaster.”