The number of Merseyside firms facing ‘significant’ financial distress is now close to 5,000, according to new data from Begbies Traynor. Tony McDonough reports.
The latest data, collated during Q3 of this year, shows 4,970 city region firms report facing financial difficulty. This represents a year-on-year increase of 4.35% (up from 4,763) and a quarterly jump of 9.18% (up from 4,552).
Begbies Traynor is a leading independent business recovery specialist. Their Red Flag dataset tracks key factors behind company distress and failure rates.
‘Significant distress’ refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth.
Hardest hit sectors include construction, real estate and property, and support services which, together, make up nearly half (46%) of the total number of significantly distressed firms.
Businesses operating in the professional services sector on Merseyside also saw a marked increase – almost 30% (28.66%) of advisory firms reported feeling the effects of distress in other sectors of the regional economy.
And the number of bars and restaurants in significant distress now totals nearly 200 (183), with many family-owned businesses struggling to survive.
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Jason Greenhalgh, partner at Begbies Traynor, said: “If this trend continues, we will see more than 5,000 firms on Merseyside entering significant financial distress before the end of the year. The effects of inflation, high interest rates and energy prices in 2023 are taking their toll and are evident in this data.
“Construction, property and professional services are key sectors of our regional economy and the sheer volume of firms in distress in these sectors is a worrying indicator as we head towards the end of the year.”
Stephen Berry, partner at Begbies Traynor, added: “Business owners will be hoping for a glimmer of hope in the form of positive announcements in the Autumn Statement later this month geared towards supporting entrepreneurs.
“The current global challenges as well as the fact a General Election is looming next year add to an air of uncertainty.
“Ultimately, business owners need to act fast if they find their finances being drained by the burdens they face.
“The pressure is on for thousands of businesses on Merseyside and the acceleration of insolvency rates we have seen in recent weeks looks likely to continue. Company directors who find their business in financial distress should take swift action before their options run out.”