Financial distress is increasing exponentially across Yorkshire’s economy, with every industry sector experiencing a substantial rise in financial difficulties, according to the latest research from leading independent insolvency and restructuring business advisory firm Begbies Traynor.
Published today (29 October 2020), the Red Flag Alert data from Begbies Traynor reveals that 2,000 (7%) more Yorkshire businesses were in financial trouble by the end of September than at the end of the second quarter of 2020 in June. The increase comes despite a backlog of court action preventing many CCJ’s and winding up petitions being issued.
Year on year, a further 4,000 businesses were in distress, equating to a 14% increase, and affecting a total of 34,444 firms in the region. Across the UK as a whole the data showed distress increasing by 14% since Q3 2019, and 6% since Q2 this year, with 557,000 businesses now in financial difficulties.
Despite the Government’s summer Eat Out to Help Out campaign, which saw more than 100 million subsidised meals sold during August, bars and restaurants remained one of the worst hit sectors. In Yorkshire the number of financially distressed bar and restaurant businesses leapt by 15% year on year, with a 9% rise since Q2 and more than 1,500 businesses in trouble in the sector. The region’s hotel industry also saw a 10% annual climb in distress.
The boom in ‘staycation’ holiday bookings has also apparently failed to stem a tide of distress in the travel and tourism sector where businesses in financial difficulty rose by 16% since Q3 2019 and 13% since June.
The region’s real estate and property services firms also continued to struggle, with a 22% year on year increase in distress in Q3 and 3,500 businesses in that sector affected in Yorkshire. A further 270 property companies had become financially distressed since the end of June.
Julian Pitts, (pictured) Begbies Traynor’s regional managing partner for Yorkshire, said: “Last week’s promise by Rishi Sunak of greater financial support for businesses that are reeling from the effects of being placed in the higher Tier 2 and Tier 3 categories, as much of Yorkshire now has, is welcome news.
“However there are real fears that for many businesses, particularly in the region’s hospitality industry, the funding may have come too late to save those that have suffered from the chronic lack of revenue brought about by the blanket 10pm curfew and Tier 2 ban on households mixing indoors.
“Seeking professional advice is always the best course of action for any small business that finds itself in financial trouble. There may well be strategies that, if put in place now, could help to future-proof an organisation, even in the face of the combined uncertainties of the covid pandemic and the increasingly likely prospect of the Government failing to secure a trade deal with the EU.”