Firms facing financial distress, says report

While the total number of struggling businesses remained static compared to the same period last year at 2,875, the figures reveal difficulties within the property sector.

The Red Flag Alert data for the first quarter of 2019, which monitors the financial health of UK companies, reveals that nationally, 484,000 UK businesses are in significant financial distress, giving rise to concerns that the UK could suffer a broader economic slowdown during 2019. Companies involved in buying, selling and letting property took much of the hit with a 16 per cent increase in struggling companies compared to the same period last year.

When looking at the sector landscape for Shropshire firms in significant financial distress, property companies saw an increase of 20 per cent year on year, while leisure businesses were up by seven per cent, as ongoing economic uncertainty continues to have an impact. However, some sectors in Shropshire are showing tentative signs of stability, with the number of media and industrial firms in significant financial distress down by 18 per cent and 11 per cent respectively on the same period in 2018.

Mark Malone, partner at independent insolvency firm Begbies Traynor which created the report, said: “Many businesses in Shropshire are in limbo and are deferring major investment decisions. This, combined with consumers holding back on big ticket purchases, has resulted in increasing significant distress across many sectors.”

“This trend is reflected in our latest Red Flag research,” Mr Malone added., which clearly shows both business and consumers have taken a cautious approach and limited their exposure.

“Worryingly, the data also shows that this economic malaise appears to be indiscriminate across multiple sectors, so needs to be stopped in its tracks by a combination of political certainty and a commitment to support UK business – particularly to SMEs which are the ‘engine room’ of the UK economy.”