Financial distress continued to swamp businesses across the UK in the second quarter of this year, with Yorkshire revealed as the most severely affected English region, according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist, Begbies Traynor.
Published on 22 July, the report found that in Q2 of 2024, early stage or ‘significant’ financial business distress had risen by 36.9% in the UK, compared to the same quarter in 2023, to affect 602,000 companies. Yorkshire firms were particularly badly affected: significant distress rose by 43% year on year, with 42,000 business in the region displaying signs of financial problems.
Quarter on quarter there was a rise of 8.6% across the UK and of 10.3% in Yorkshire.
Julian Pitts, (pictured) regional managing partner for Begbies Traynor in Yorkshire said that the increase in signs of early distress was worrying. “Despite some unexpectedly positive news this month of a return to GDP growth in May, this latest dramatic rise in businesses experiencing early-stage distress is concerning and suggests that for businesses on the ground, and particularly for SMEs, things may get worse before they get better.”
The Red Flag Alert report also measures more severe or ‘critical’ distress, which had also risen year on year, climbing by 34.5% across the UK and by 42.5% in Yorkshire.
Industries worst affected by ‘significant’ distress, according to the Red Flag report, included construction. Nearly 7,000 building firms in Yorkshire were affected by business distress in Q2 2024, almost double the number (a 48.6% increase) as in the same period last year.
The real estate and property services sector was also badly hit with 4,187 estate agencies and property management and maintenance businesses affected in Yorkshire, 27% more than in Q2 of 2023.
Retail also continued to see distress rise. General retailers, which excludes those selling food and drink, experienced an increase in financial distress of 43% year on year and 15.3% since the first quarter of the year, to affect 3,187 businesses in Yorkshire.
Julian Pitts added: “Although the change of government is extremely welcome and gives scope for an economic reset and focus on growth, the fact is that the SMEs that make up 99% of UK businesses are still grappling with the fallout from Brexit, the pandemic, high energy prices, inflation and the drop in household incomes that’s decimated many people’s ability to spend.
“For owner managers who are experiencing escalating financial problems, the message is, you are not alone: being proactive and seeking professional help at an early stage can make the difference between a business getting back on track or sliding into more serious financial problems.”
