Shropshire sees 33 per cent year-on-year increase of businesses in distress

Ongoing economic uncertainty, inflationary pressures and debt burdens, along with persisting weakness in consumer confidence, are all contributing to business stress in Shropshire, with 3,784 at risk of economic failure.

This represents a quarterly increase of three per cent, and an annual rise of 33.2 per cent.

Looking at the sector picture, there are 636 construction businesses in significant distress, making it the most troubled sector in the county.

There have also been significant increases in the number of leisure and cultural and support services businesses facing difficulties, with these industries seeing annual increases of 61.5 per cent and 44 per cent respectively.

Nationally, the latest Red Flag Alert research for quarter three 2024 recorded 632,756 businesses in significant distress, an increase of 32.3 per cent on the same period in 2023. Meanwhile, the number of businesses in ‘critical’ financial distress has decreased, with a quarterly fall of 23.2 per cent to 31,201 and a year-on-year drop of 17.3 per cent.

Mark Malone, partner at Begbies Traynor in Shropshire, said: “There is no hiding from the fact that 2024 has been hard to navigate for companies, and the final quarter looks no different, as a high degree of uncertainty weighs on the UK economy.

"While the decline we have seen in 'critical' financial distress at a national level is a welcome surprise after a challenging year, it is too early to say if this is a trend that will continue into the autumn – traditionally a busy period for corporate insolvencies.

“While there are tentative signs of a recovery, uncertainty continues to loom over Shropshire businesses. In response, many business leaders are holding their breath as they await clarity over what the forthcoming Budget will bring.

“With wider geopolitical issues also having an impact, the only certainty is uncertainty, and we know this is bad for both business and investment alike. Combine this high level of uncertainty with the expectation of higher business costs post the Autumn Budget and it is clear that the economy is far from being out of the woods.”