Financial distress continued to swamp businesses across the UK and in the Humber region in the second quarter of this year, according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist, Begbies Traynor.
Published on 22 July, the report found that in Q2 of 2024, early stage or ‘significant’ financial business distress had risen by 36.9% in the UK, compared to the same quarter in 2023, to affect 602,000 companies. In the Humber region significant distress rose by 38.7% year on year, with 2,700 business in the region displaying signs of financial problems.
Quarter on quarter there was a rise of 8.6% across the UK and of 14.6% in the Humber region.
Andrew Mackenzie, partner at Begbies Traynor Group in the Humber region said that the increase in signs of early distress was worrying. “Despite some unexpectedly positive news this month of a return to GDP growth in May, this latest dramatic rise in businesses experiencing early-stage distress is concerning and suggests that for businesses on the ground, and particularly for SMEs, things may get worse before they get better.”
Industries worst affected by ‘significant’ distress, according to the Red Flag report, included construction. Five hundred and twenty-four Humber region building firms were affected by business distress in Q2 2024, up 37.5% on the same period last year.
The real estate and property services sector was also badly hit with 215 estate agencies and property management and maintenance businesses affected in the region, 21% more than in Q2 of 2023.
Retail also continued to see distress rise. General retailers, which excludes those selling food and drink, experienced an increase in financial distress of 60% year on year and by almost a quarter (24.7%) since Q1 of this year, to affect 192 businesses in the Humber region.
Andrew Mackenzie added: “Although the change of government gives scope for an economic reset and focus on growth, the fact is that the SMEs that make up 99% of UK businesses are still grappling with the fallout from Brexit, the pandemic, high energy prices, inflation and the drop in household incomes that’s decimated many people’s ability to spend.
“For owner managers who are experiencing escalating financial problems, the message is, you are not alone: being proactive and seeking professional help at an early stage can make the difference between a business getting back on track or sliding into more serious financial problems.”
