Businesses in Sheffield and across the UK are experiencing rapidly escalating levels of distress, despite Government support measures designed to avoid mass insolvencies.
According to the latest Red Flag Alert data, published today (22 April 2021) by leading independent business rescue and recovery specialist Begbies Traynor, numbers of businesses showing early-stage, or ‘significant’, signs of financial distress had risen by 29% since Q1 last year, to affect 5,138 firms in Sheffield. In the last quarter alone 665 more Sheffield businesses had begun to experience financial problems, a 15% increase on Q4 2020.
The picture was reflected across the UK, which saw a 42% rise in symptoms of early distress, compared with the same quarter last year, immediately before the outbreak of the pandemic. ‘Significant’ distress rose by 15% quarter on quarter to affect 723,000 firms across the UK.
“It is enormously worrying that we are seeing distress levels rising so steeply across the board, despite the raft of support measures put in place by the Government to stave off widespread business collapse,” said Kris Wigfield, managing partner at Begbies Traynor in Sheffield.
“It is inevitable that Government support will have to be withdrawn at some point, and, coupled with the fact that the courts are still struggling to catch up with a backlog of cases brought against indebted companies, it seems likely that what we are seeing in this latest Red Flag data unfortunately is the calm before a very turbulent storm for a large number of businesses.”
The past 12 months saw early-stage distress rise by more than a quarter across almost every business sector in Sheffield. Worst hit has been the construction industry, which now has almost 700 firms affected, up by 31% (or 163 businesses) on Q1 2020. Some 550 real estate and property services companies in the city are now experiencing financial difficulties, a 48% year-on-year increase, while businesses in the health and education sector saw a 38% hike in distress, with 370 Sheffield-based firms in the sector struggling.
“For small business owners in particular it can seem that there is nowhere to turn in the face of such large-scale financial challenges but seeking professional help should always be the first port of call and can be a meaningful first step towards future-proofing business finances and management systems,” added Mr Wigfield.
