There has been a 28% surge in the number of Liverpool city region businesses in ‘significant financial distress’, new data shows, with tourism and gyms seeing the biggest rises. Tony McDonough reports
There were more than 6,000 firms in Liverpool city region in “significant financial distress” in the first quarter of 2024 – 28% up on the same period in 2023.
This figure was also 7.5% higher than the final quarter of 2023, according to the latest quarterly Red Flag survey from insolvency specialists Begbies Traynor. Biggest rises were in travel and tourism, gyms and food and drug retailers.
‘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.
Total for the first three months of 2024 was 6,013. This compares to 4,708 a year ago and 5,596 in the previous quarter. Across the UK the rise was even higher – up 30% to 554,554. Begbies adds cutbacks in consumer spending are likely behind the rise.
Jason Greenhalgh, partner at Begbies Traynor in Liverpool, said: “These figures clearly demonstrate the huge challenge that businesses are facing in enticing people to part with their hard-earned cash not only on discretionary items like gym memberships but everyday necessities like food.”
Large double-digit percentage leaps in significant distress over the past 12 months have been seen in sectors being challenged by the general public cutting back on their own personal spending.
Travel and tourism saw a 50% increase in distress, sports and health clubs saw a 44% increase and food and drug retailers a 46% increase.
Largest volume of distressed businesses are found in the quartet of key economic sector hubs: construction, property, support services and professional services which, together, make up more than half (53%) of the total (3,173) number of significantly distressed firms.
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“The fact that almost half of all businesses operating in significant distress are in four of the key economic sectors in the region is alarming and will obviously have a knock-on effect throughout the remaining 18 sectors we analysed,” added Jason.
And, urging business to not delay in seeking help and advice, another Begbies Liverpool partner, Stephen Berry, warned: “There are no indications the situation is going to get dramatically better for businesses as we progress through 2024.”