New research from Begbies Traynor in Liverpool reveals there are now almost 7,000 Merseyside businesses in significant financial distress.
The Red Flag Alert data for Q2 2019, which monitors the financial health of companies on Merseyside, found 6,788 businesses were experiencing significant distress at the end of June 2019 – a 3% increase on the same time last year.
The average debt of companies has also doubled to £66,226 a year, from £29,872 in 2016.
There was also a worrying increase in the number of businesses in critical distress during the same period – often a precursor to formal insolvency – with a rise of 2% year-on-year.
Support Services has the largest volume of businesses in significant distress (1,073) in the region, an year-on-year increase of 8%. Construction followed (979), alongside Real Estate & Property (787) which is an increase of 12% year-on-year.
This means that more than 1,500 firms in the property and construction sector on Merseyside are now in distress.
Keith Tully, partner in the Liverpool office of Begbies Traynor, said:
“These statistics reveal the scale of the challenge for SME’s in our region. The volume of firms in distress in key sectors on Merseyside like property and construction is alarming. Political uncertainty is one of the reasons why many companies have said they are suffering. Now we already have complete clarity on Boris Johnson becoming our new Prime Minister, we are all now looking for certainty on the Brexit position.
“We have to remember that while an average debt of £66,000 doesn’t seem much to large companies, this can be of significant detriment to the SMEs on Merseyside who are struggling.”