Record number of Yorkshire businesses in financial distress
The report for Q3 2024 reveals that 'significant' or early-stage business distress had climbed rapidly, affecting 44,000 businesses in Yorkshire and 633,000 business across the UK. In Yorkshire, the number of companies with financial problems had increased by more than a third (33.5%) since the same quarter in 2023 and by 4.7% since Q2 of this year. For the UK, it was a similar picture, with 'significant' distress up 5.1% on the previous quarter and 32.3% higher than Q3 2023.
Driving increased distress in Yorkshire, the food and drink sector saw a marked quarter-on-quarter rise of 18.2% and year-on-year increase of 76.5% for food and drug retail; in food and beverage production, distress had risen by 11.6% since the previous quarter and by 55.2% since the same period last year.
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Other sectors facing financial challenges in Yorkshire, according to the latest Begbies Traynor figures, included hotels and accommodation, where distress had risen by 13% since Q2 of 2024 and by 59.1% year on year. Bars and restaurants have also faced difficulties: regional distress in the sector, which includes pubs, clubs, restaurants and cafes, was up by 48.2% since Q3 of 2023.
Construction remained the sector with the largest number of financially distressed businesses. At 6,925 firms, that was up by 26.3% year on year but by only by 0.4% on the previous quarter.
With 21 of the 22 sectors monitored in Yorkshire by Red Flag Alert reporting levels of 'significant' distress up on the previous quarter, the latest data highlights how economic uncertainty is impacting businesses across the economy, pushing another 11,000 Yorkshire businesses into financial distress since Q3 2023.
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: "It seems that almost no area of the economy has escaped from the uncertainty that is weighing so heavily on business, hindering everything from consumer spending to investment.
"2024 has been another tough year to navigate for a lot of businesses. While many are awaiting clarity over what this month's Budget will bring, business leaders are anticipating that companies and investors could bear the brunt of changes to the tax regime.
"This is set against the backdrop of wider geopolitical instability, including over the US election and the ongoing and escalating conflict in the Middle East, both of which will have worldwide consequences.
He added: "We all hope that 2025 will be the year that the UK economy finally turns a corner but, while there are tentative signs of recovery, the high levels of debt that so many businesses have accumulated could unfortunately result in high levels of insolvencies still to come. As ever, businesses who feel they are struggling financially would be well advised to seek professional advice before the situation becomes irreparable."
Top 10 sectors in Yorkshire affected by 'significant' financial distress, by number of companies
Construction 6,925Support services 5,780Real estate and property services 4,269General retailers 3,409Professional services 3,189Health and education 3,066Telecoms and IT 2, 341Food and drug retailers 1,754Bars and restaurants 1,670Manufacturing 1,593
