The number of firms in Yorkshire facing serious financial problems that could put them at risk of insolvency jumped by almost a third 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, very severe, or “critical”, distress had risen by 32.4% in Yorkshire since the previous quarter, to affect 3,303 businesses in the region. Year on year the number of severely distressed firms in Yorkshire had grown by 18.3%.
The figures also highlight the speed with which severe distress is increasing in Yorkshire. The region had suffered an even more pronounced increase than the UK as a whole, which recorded a 25.9% climb in critical distress since Q3 2023 and a 2.6% year-on-year increase.
According to Begbies Traynor’s report, less severe or “significant” distress was also increasing and had risen by 13.1% in Yorkshire since the end of Q3 2023 (12.9% across the UK) and 9.2% since Q4 2022 (5.6% across the UK).
Julian Pitts, Begbies Traynor’s regional managing partner in Yorkshire, said: “Critical distress refers to businesses that have county court judgements of more than £5,000 against them, which is often a precursor to them ceasing to trade.
“The fact that the number of businesses facing this kind of very advanced distress has risen by almost a third in just three months here in Yorkshire, and by more than 25% across the UK economy, is perhaps another sign 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.
“Combined with high inflation, which is triggering rising wages and material costs, and weak consumer confidence, unfortunately many of these businesses may be heading towards insolvency and should seek professional advice, if they can, to avoid the worst happening before it is too late.”
Yorkshire’s construction industry recorded the region’s highest number of critically distressed firms at the end of last year according to the Red Flag Alert data, at 604 and up by 30.7% since the previous quarter. Real estate and property services firms facing severe distress numbered 409, an increase of 35.4% on Q3 2023, while professional services, which includes accountants, solicitors and architects, saw a 51.5% hike in critical distress, affecting 256 businesses.