Written by: Keith Tully
Published: 18th January 2018
There was a sharp rise in the number of British companies facing serious financial problems during the latter months of last year as compared with the same period in 2016.
That’s according to the insolvency firm Begbies Traynor whose figures suggest that there were close to half a million UK businesses in a situation of “significant financial distress” at the end of last year.
The precise number of companies considered to be in significant distress is given as 493,296, which represents a 36 per cent increase on the comparative number at the end of Q4 2016 and a rise of 10 per cent compared to the end of Q3 2017.
Political uncertainty, rising inflation and the weak pound are all cited by Begbies Traynor as factors contributing to an environment in which a great many UK businesses are finding themselves financially squeezed on a consistent basis.
The increase in the base rate of interest by the Bank of England in November last year and a tightening of credit availability across the country are also understood to have been making life more difficult for companies nationwide.
Begbies Traynor’s figures form part of its ‘Red Flag Alert’ research report, which focuses on the signs of serious financial problems among businesses across all industries.
The latest numbers suggest that there we over 120,000 service sector companies showing signs of financial distress at the end of last year, which represents a jump of 43 per cent as compared with the same figure for the end of 2016.
All sectors and all regions of the UK are believed to have seen an increase in their numbers of financially stretched businesses during 2017, with London alone apparently home to 121,528 companies in significant distress as the year ended.
“Prolonged exchange rate weakness undoubtedly hit some businesses hard last year and despite a recent recovery in Sterling, this improvement is yet to feed through in terms of any widespread recovery in corporate health,” commented Ric Traynor, Begbies Traynor’s executive chairman.
“For the thousands of businesses now showing signs of financial ill health, prudent cost management, sustained improvements in productivity, and finding innovative ways to stay ahead of the competition will be critical to surviving beyond the next 12 months.