Shropshire businesses facing 'significant financial distress' says report
Almost 3000 Shropshire companies are classed as being in ‘significant’ economic distress.
That is according to latest figures from Begbies Traynor’s ‘Red Flag Alert’ which monitors the financial health of UK companies.
Rising interest rates, debt, subdued consumer confidence, high energy costs, and wider economic uncertainty are putting considerable financial pressure on businesses across the region, with 2840 said to be at risk of economic failure.
The figures highlighted particular sector hotspots, with the professional services and health and education sectors seeing annual increases of 26.9 per cent and 30.4 per cent respectively in the number of companies facing financial problems.
Nationally, the latest Red Flag Alert research for quarter three of 2023 recorded 478,176 businesses in significant distress, up 8.7 per cent on the prior quarter, with almost 40,000 classed as being in ‘critical financial distress’.
The sectors driving the quarterly increase in critical distress were construction, real estate and property and support services, up 46 per cent, 38 per cent and 28 per cent respectively.
Mark Malone, partner at Begbies Traynor in Shropshire, said: “This latest data highlights how the debt storm, which has been building for years, but had been held off by several measures to provide breathing space for companies, is likely to break.
"Many businesses that had geared up on debt at historically low rates, and were only able to survive during the pandemic thanks to Government support, must now deal with a financial reality check as higher interest rates hit working capital for the foreseeable future.
“Taken together with stubbornly high inflation and weak consumer confidence, many of these businesses will inevitably head towards failure.
"While stabilising inflation and interest rates could start to slow the rising levels of distress in the economy, history dictates that this will take some time and insolvencies often peak long after a recovery has started. Unfortunately for many businesses, time is not on their side.”
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