Thousands of businesses in Shropshire in financial distress

Shropshire saw a two per cent increase in the number of businesses struggling between quarter three and quarter four in 2019 – now 2,965 – which is also an increase of one per cent on the same period in 2018.

The Red Flag Alert data for quarter four, which monitors the financial health of UK companies, reveals that nationally, 494,000 UK businesses are in significant financial distress – the highest number recorded by the research – with the real estate and property, support services, construction and retail sectors particularly badly affected.

This is a rise of 81 per cent since 2016, and a significant number of these companies were formed after 2014, demonstrating that younger businesses are the most vulnerable to failure.

When looking at sectors in Shropshire that are in financial difficulty, construction and real estate and property businesses are in the most distress – increasing eight per cent and six per cent respectively between quarter three and quarter four.

Brexit

More positively, the figures also revealed that some sectors in Shropshire are showing tentative signs of stability during the same time period, with the number of troubled firms in support services and the food and beverage industry down on the previous quarter.

Mark Malone, partner at Begbies Traynor in Shropshire, said: “Businesses and the UK economy as a whole will want to avoid a repeat performance of 2019, where distress increased to record levels on the back of ongoing uncertainty around Brexit. These figures clearly demonstrate the impact of this indecision, so with political certainty and a clear Brexit path, businesses in Shropshire should, at last, be able to plan for 2020 with a greater sense of clarity.

“However, the macro-economic climate is complicated, and we are seeing clear winners and losers, as evidenced by this latest Red Flag data. Currently, we do not know if the failing performance within some sectors is due to short term confidence issues, or more fundamental economic and structural issues.

“The landscape of UK business is slowly changing. In order to capture the attentions of consumers and clients, businesses need to demonstrate that they not only have a compelling product or service at the right price, but also one that has strong environmental credentials to boot.”