More than 3,000 Shropshire companies in significant financial distress

These figures represented a four per cent decrease in the number of businesses struggling between the fourth quarter of 2021 and the first quarter of 2022, which was also a 21 per cent year-on-year fall on the same period in 2021.

However, when looking at the sector picture, sport and health and the industrial sector experienced the biggest quarterly increases, seeing 12 and 11 per cent rises respectively between quarter four in 2021 and quarter one in 2022.

The figures have come from Begbies Traynor’s 'Red Flag Alert', which monitors the financial health of British companies.

Nationally, the latest Red Flag Alert research for quarter one in 2022 recorded 581,596 businesses in significant distress, which is flat on the previous quarter. However, the figures also showed a marked increase in the numbers of businesses deemed to be in ‘critical’ distress, with a 19 per cent year-on-year increase driven by a 51 per cent jump in the construction sector and a 42 per cent rise among bars and restaurants.

There are also concerns about a steep increase in County Court Judgements (CCJs) as data revealed there were 11,673 rulings in March – up 179 per cent on the monthly average for the previous two years – and the highest level in a single month in five years.

Mark Malone, partner at Begbies Traynor in Shropshire, said: “While the year-on-year data of companies in Shropshire in significant distress may be encouraging, the critical distress and CCJ numbers highlight troubles building up in the system. For the first time in more than decade, inflation is the prime concern for businesses as companies struggle under rising costs.

“However, having ploughed so much money into protecting businesses over the past two years, the Government won’t want to see it wasted as companies collapse, unable to repay their debts. Taking a hard line on repaying pandemic funding and other loans would likely drive many businesses over the edge, which no-one wants to see as the economy struggles to recover.

“As such, there needs to be a long-term view. For example, we could see support for businesses through leniency in repaying pandemic funding, or an approach like war bonds, with terms being extended as ministers follow the adage that a rolling loan gathers no loss.

“However, any businesses facing financial difficulties, for whatever reason, should seek professional advice in order to fully understand the options available.”