More than 34,200 Yorkshire businesses experienced 'significant distress' in final quarter of 2021, according to Begbies Traynor

More than 34,200 Yorkshire businesses experienced 'significant distress' in the final quarter of 2021, according to a new study.

Bosses at business rescue and recovery specialist Begbies Traynor, which carried out the research, said the region's businesses had been on a rollercoaster since the pandemic started, which made planning extremely difficult.

In a statement, Begbies Traynor said: "Despite some signs of economic recovery earlier last year, the final quarter of 2021 saw a marked rise in instances of early-stage financial distress compared with the previous quarter as businesses in Yorkshire, along with the rest of the UK, reeled from the impact of the latest Covid variant, following two years of pandemic disruption."

According to the latest Red Flag Alert data, published today by Begbies Traynor, businesses in Yorkshire experienced a 4% rise in ‘significant’ distress, which refers to businesses that have had CCJs of less than £5,000 filed against them, in the fourth quarter of 2021, compared with the previous three months.

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Businesses in Yorkshire, like those across the UK, have been on a rollercoaster ride of change and uncertainty over the last two years, making planning and forecasting extremely difficult."

The statement added: "This was slightly lower than the rest of the UK which experienced a quarter on quarter increase of 5%. In Yorkshire, over 34,200 businesses saw this type of distress in the final quarter of last year, and more than 589,160 businesses across the UK were affected."

However, looking overall at the fourth quarter of 2021, levels of ‘significant’ distress in Yorkshire had fallen by 8% compared with the final quarter of 2020, while there was a 6% decrease across the UK as a whole year on year.

The statement added: "In terms of levels of more advanced or ‘critical’ distress, which refers to companies that have financial problems such as CCJs of more than £5,000 filed against them, in Yorkshire there was a rise of 12% compared with Q3 2021 while the UK as a whole saw only a slight rise of 1%. The region also experienced a 46% increase in advanced distress compared with the same period the previous year, while the UK average was an uplift of 7% compared with Q4 2020."

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Businesses in Yorkshire, like those across the UK, have been on a rollercoaster ride of change and uncertainty over the last two years, making planning and forecasting extremely difficult.

"The unprecedented challenges they have faced range from stop-start operations amid successive lockdowns, to adapting to ever-changing Covid restrictions, and now dealing with ongoing issues around severe staff shortages and global supply chain disruption.

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“While financial distress in the region appeared to be levelling off earlier in 2021, with the impact of a new and highly infectious variant right before the normally busy Christmas season, we are already seeing a worrying rise in signs of early-stage financial problems.”

In Yorkshire, almost all sectors saw a rise in ‘significant’ distress since the previous quarter with printing and packaging (up 8%), and support services and utilities (both increased by 7%) among the worst hit. In addition, travel and tourism, financial services, real estate and property services, and manufacturing all saw early distress rise by 5%.

Mr Pitts continued: “After such a difficult period, unfortunately the year ahead also looks fraught with problems for the region’s businesses. The additional pressure of rising prices and inflation as energy costs increase dramatically, are likely to squeeze both businesses and consumers.

"While the government appears reluctant to provide more help for firms impacted by the latest Omicron outbreak, businesses will also be faced with the withdrawal of pandemic support measures and tax rises. With tough times ahead, we once again advise directors to seek professional advice at the first signs of financial distress when more options will be open to them.”