Rising financial distress sees number of Yorkshire businesses in trouble up by more than a third
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The report found that in Q1 of this year, early-stage or ‘significant’ financial distress had risen by 36 per cent in Yorkshire since Q1 2023, affecting 38,000 businesses in the region. Quarter on quarter, however, the number of ‘significantly’ distressed firms in Yorkshire had grown by just 2.21 per cent. The region’s economy fared slightly worse than the UK as a whole, which saw a 31 per cent increase in significant distress in the same 12-month period.
Very severe, or ‘critical’ business distress, which puts companies in imminent danger of insolvency, had also risen by 33 per cent since Q1 of last year, affecting 2,800 businesses in the region.
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Hide AdThe retail sector was one of the worst affected by increasing distress, impacted by both inflation and the decimating effect of the cost-of-living crisis on consumer spending. Food and drug retail saw an increase in distress of 54 per cent year on year and of 17 per cent since Q4 2023 in Yorkshire, while among general retailers in the region, distress was up 34 per cent year on year and 10 per cent on the previous quarter.
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Other sectors hit by rising levels of financial problems included media, which spans advertising, newspaper, TV, radio film and books. The media industry in Yorkshire saw levels of ‘significant’ distress increase by 55 per cent year on year and 17 per cent since Q4 2023.
Construction continued to be the sector with the highest number of distressed firms: more than 6,200 in Yorkshire, up 39 per cent year on year, but falling by 1 per cent since the previous quarter.
Julian Pitts, Begbies Traynor’s regional managing partner in Yorkshire, said: “Persistently high interest rates continue to pile pressure on beleaguered businesses who are struggling with the costs of servicing debts, at a time when reduced consumer demand is exacerbating financial strains.
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Hide Ad“This is compounded by geo-political turmoil and ensuing supply chain disruptions and although economic growth is expected to rally this year, in the current environment we are advising businesses to keep tight control of their finances and seek professional help at the first signs of trouble to avoid problems becoming insurmountable.”