Almost 9,000 city region firms ‘on the brink’

Almost 9,000 firms in Liverpool city region are in ‘significant distress’ according to the latest data from Begbies Traynor. Tony McDonough reports

Liverpool city centre
Almost 9,000 city region firms are in ‘significant distress’ . Picture by Tony McDonough


Almost 9,000 businesses in Liverpool city region are in ‘significant distress’  and are fighting for their survival.

According to the latest quarterly Red Flag survey from insolvency specialists Begbies Traynor, there are 8,893 Merseyside firms in significant distress. This is actually a 13% drop on the same period last year which followed a national lockdown.

And, since the previous quarter, the number of businesses in distress in the city region has fallen by 103. However, Begbies warns that despite signs directors are “fighting hard” they are facing increasing headwinds from soaring input and energy costs.

Earlier this year Begbies warned of an “insolvency storm” on the horizon and, since then, the economic picture has deteriorated. Nationally, more than half a million firms are now in significant financial distress.

A company classed as being in significant distress is one with minor CCJs (of less than £5,000) filed against them or which have been identified by Red Flag Alert’s credit risk scoring system. It screens companies for a sustained or marked deterioration. It measures working capital, contingent liabilities, retained profits and net worth.

The Red Flag Alert data, published by Begbies Traynor, has analysed the health of companies across the region for the last 15 years.


Keith Tully, partner at Begbies Traynor in Liverpool. Picture by Dominic Salter


Property (1,348), construction (1,305) and support services (1,346) were the three sectors that contained the highest volumes of distressed firms. However, those in financial services, industrial transportation and health and education have all seen double-digit percentage falls in distress levels.

Keith Tully, partner at Begbies Traynor in Liverpool, said: “It will be a relief for many businesses to see a levelling off in distress rates in the past quarter. But it remains to be seen whether this trend continues and company directors across our region should remain cautious.

“Many businesses have been agile in their response to rising inflation. Hopefully they will have planned for costs of raw materials in particular to continue rising during the remainder of this year.

“Ambiguity over which tax policies will be enacted in the UK looks set to continue until September when the new Prime Minister will be confirmed but we’ll already be most of the way through the third quarter by that point.

“As well as uncertainty over domestic politics, there’s the international aspect to consider including the situation in Ukraine and the increasing cost of energy as we progress into autumn and winter.”

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