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Humber businesses under financial pressure as distress climbs

High interest rates, together with persistently high inflation and a weakening economy, are combining to push increasing numbers of businesses across the Humber region to the brink, according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist Begbies Traynor.

The report found that in Q3 of this year, combined distress rates in the region had risen rapidly since the previous quarter, climbing by 12.2% to affect almost 2,000 businesses (1,995).

Across the UK, combined business distress increased by 9.8% on the previous quarter and 4.4% year on year, to affect more than half a million companies (515,898). Very severe, or ‘critical’, distress was up by 25% on Q2, leaving 37,722 firms nationally facing major financial problems, with marked deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth.

Andrew Mackenzie, partner at Begbies Traynor in the Humber region, said: “Inflation is still extremely high, despite the recent fall, and firms in the Humber region and across the country are facing continued rises in the costs of running a business, as well as the challenges of weakening customer demand and high borrowing costs.

“These blows are now pushing many businesses to the brink and are made harder to cope with by the fact that many firms’ finances are in a vulnerable state as a result of the covid pandemic, followed swiftly by the cost-of-living crisis.

“It goes without saying that for any business owners who are beginning to experience financial difficulties, seeking professional advice can mean the difference between charting a route back to financial health, or the problems accumulating to become insurmountable.”

According to Begbies Traynor’s report, support services (which includes a range of businesses from call centres to conference organisers and funeral providers), general retail, manufacturing, and health and education (which includes dental and medical practices, day nurseries and care homes) were the sectors that saw the highest numbers of Humber businesses in financial distress.

More than 260 support services providers in the region were suffering financial distress, an increase of 16% since Q2 2023. General retail accounted for 160 distressed Humber businesses (42% up on Q2 2023), while health and education accounted for 109 firms beset by financial distress (up 38% on Q2 2023).

Across the region, manufacturing, industrial transportation, food and drink production, as well as sport and health clubs saw distress levels fall on the previous quarter.

This was posted in Bdaily's Members' News section by Ruth Robinson .