There has been a 33% hike in UK businesses reporting ‘significant’ financial distress since Article 50 was triggered a little over a year ago, with increased levels of financial distress being seen across all sectors and regions of the UK, according to research by Begbies Traynor
There has been a 33% hike in UK businesses reporting ‘significant’ financial distress since Article 50 was triggered a little over a year ago, with increased levels of financial distress being seen across all sectors and regions of the UK, according to research by Begbies Traynor.
The firm’s red flag alert report for Q1 2018, which monitors the financial health of UK companies, shows that 477,210 businesses were experiencing ‘significant’ financial distress at the end of March 2018. This is a third more than the 358,943 reported when Article 50 was triggered on 29 March last year.
The sectors with the largest volumes of businesses in distress were support services (115,249 companies, up 40% year on year), construction (60,541, up 26%), real estate and property (41,624, up 46%) and telecommunications (32,538, up 47%). Regionally, London saw the largest increase in significant distress, up 42%, affecting 119,419 businesses in the capital.
Other sectors that experienced large increases in financial distress over the period included professional services (up 46%), financial services (up 45%) and automotive (up 15%).
Julie Palmer, partner at Begbies Traynor, said: ‘While uncertainty around the outcome of the Brexit negotiations has undoubtedly had an impact on business confidence across the UK, the economy has also faced a wide range of unexpected headwinds which have dampened progress over the past year.
‘Currency fluctuations, rising interest rates, subdued consumer spending and a cooling property market are just some of the factors that have combined with growing political uncertainty to push nearly half a million UK businesses into financial distress over the past 12 months.’
Ric Traynor, executive chairman of Begbies Traynor, said: ‘While the recent recovery in sterling should put UK businesses who import raw materials into a stronger trading position, the biggest positive impact on business confidence is likely to come when we finally receive clarity over how our eventual exit from the EU will look.
‘In the short term however, the most pressing issue is whether or not the Bank of England decides to raise interest rates next month. If they do, it could push many struggling businesses, particularly those with high levels of debt, into formal insolvency.’
Report by Pat Sweet
