Yorkshire outperforms UK when it comes to firms suffering financial distress

A scorching hot day down on Scarborough's South Bay Beach . . pic Richard Ponter 185007bA scorching hot day down on Scarborough's South Bay Beach . . pic Richard Ponter 185007b
A scorching hot day down on Scarborough's South Bay Beach . . pic Richard Ponter 185007b
Yorkshire is outperforming the rest of the UK when it comes to levels of companies suffering severe financial distress.

According to new figures the health of UK companies significantly deteriorated in the first quarter of 2019, with businesses in the property sector in particularly bad shape.

Data from Begbies Traynor found that at the end of March, 484,000 business were in significant financial distress amid current economic uncertainty. The number of businesses in “critical” financial distress, often those verging on insolvency, surged by 17 per cent year on year.

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However a greater degree of resiliency is being seen in Yorkshire, with no change having been seen in the number of businesses displaying ‘significant’ distress since the final quarter of 2018, with the total number of firms with ‘significant’ financial problems in the region standing at just over 29,000.

Some industry sectors are faring worse than others however, with the region’s real estate and property services showing a 14 per cent increase in ‘significant’ distress year on year, affecting just under 2,800 businesses.

The leisure industry in Yorkshire also seems to have borne the brunt of consumers’ unwillingness to spend in a climate of economic uncertainty. Hotels and accommodation saw a growth in distress of 12 per cent year on year, while sport and health clubs saw distress rise by 11 per cent year on year, affecting 630 businesses.

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Uncertainty continues to cast a long shadow over the economy with any potential agreement on a Brexit deal now kicked further down the road. In Yorkshire, as across the economy as a whole, firms are quite sensibly hitting the brakes and putting on hold capital investment such as in new plant machinery or technology.

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“While it is encouraging to see the apparent resilience of our region’s firms, all businesses, and particularly SMEs, would do well to keep a tight rein on cash flow in this prolonged and unpredictable situation.”

House prices fell in England for the first time since 2012 in the three months to March 2019, as Brexit uncertainty put off potential home-buyers.

Ric Traynor, executive chairman of Begbies Traynor Group, said: “We have heard from businesses that Brexit uncertainty has been a hindrance to business growth and investment. There has already been a number of high-profile firms announcing their decision to invest in other countries, which not only impacts regional economies, but also the SME supply chain.”

Sectors faring better in Yorkshire included printing and professional services.