Number of Liverpool city region firms in ‘significant financial distress’ breaks through 5,000 barrier, according to the latest Red Flag data from insolvency firm Begbies Traynor. Tony McDonough reports
There are now more than 5,000 firms in “significant financial distress” in Liverpool city region, according to new data.
In its latest quarterly Red Flag study, insolvency firm Begbies Traynor said in the final quarter of 2023, 5,596 Merseyside businesses were in significant financial distress, this is 4% up year-on-year and almost 13% higher than in the previous quarter.
‘Significant distress’ refers to businesses showing deterioration in key financial ratios and indicators. They include those measuring working capital, contingent liabilities, retained profits and net worth.
Firms in construction, property, support services and professional services, together make up 54% of those in distress. And printing and packaging, travel and tourism and finance services all saw double-digit rises.
Stephen Berry, partner at Begbies Traynor in Liverpool, said: “2024 has been a challenging start for SMEs on Merseyside.
“There’s no doubt that the build-up of pressure from last year continues to have a major impact and this latest data demonstrates the size of the problem for businesses in our region.
“Recent inflation figures announced compound the threats even further for business owners struggling to stay on top of things as those in their supply chain pass greater costs on in order to survive.
“The fact that more than half of these companies in significant distress operate in the traditionally strong sectors of construction, property, professional and support services is of grave concern for everyone doing business in these areas.”
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His colleague Jason Greenhalgh, also a partner in the Liverpool office, warned business owners and directors against “burying their heads in the sand”. He added they needed to act “quickly and decisively”.
He said: “With a General Election looming later this year, it is feasible we could see further support for businesses being announced in the next Budget.
“It remains to be seen whether this would be too little too late for many of the firms in our region included in our numbers.”