The number of North East businesses facing serious financial difficulties is increasing by more than a quarter

Andrew Little and Gillian Sayburn from Begbies Traynor in Newcastle

TThe number of North East firms facing advanced financial problems that could put them at risk of insolvency rose by more than a quarter in the last three months of 2023, according to the latest Red Flag Alert figures from leading independent business rescue and recovery specialist. Begbies Traynor.

In the last quarter of the year, very serious, or “critical,” emergencies increased in the Northeast by 27.1% from the previous quarter, affecting 836 businesses in the region. Year-on-year, the number of strongly threatened companies in the Northeast increased by 12.5%.

The figures also show the speed at which severe distress is growing in the North East. The region suffered an even sharper increase than that affecting the UK as a whole, which saw a 25.9% increase in critical difficulties from Q3 2023 and a 2.6% year-on-year increase.

According to Begbies Traynor’s report, less severe or “significant” difficulties (which refer to businesses showing deterioration in key financial indicators and ratios, including those measuring working capital, contingent liabilities, retained earnings and net worth) also increased, affecting more than 9,500 businesses in the Northeast. It grew by 12.9% in the region from the end of Q3 2023 (the same as the UK as a whole) and by 2.6% from Q4 2022 (5.6% as a whole in the UK).

Andrew Little, North East partner at Begbies Traynor, said: “It is extremely worrying to see that the number of businesses facing a very advanced crisis has increased by more than a quarter in just three months here in the North East and across the UK. Whole. This is perhaps another sign that businesses that took on debt when interest rates were low and took advantage of government support during the pandemic are now being forced to deal with the current reality of high interest rates.

Partner Gillian Sayburn adds: “With high inflation driving up wages and material costs, as well as weak consumer confidence, it seems likely that many of these businesses could be heading for insolvency – we urge them to seek early warning before financial difficulties professional advice. out of control.”

Some industries in the North East were particularly hard hit in food and drink, where critical distress increased by 233% quarter-on-quarter; financial services (+110%); wholesale (+100%); and leisure and cultural activities (+71%).

Only three sectors in the region saw critical declines from the previous quarter – utilities down 50%; media fell 13%; and food and drug retailers fell 4%.

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