However, after several steady quarterly increases, Shropshire saw an 11 per cent decrease in the number of struggling businesses between quarter one and and quarter two to 3,561, although this was significantly up (16 per cent) on the same period in 2020.
Nationally, the latest Red Flag Alert research for quarter two has recorded 651,492 businesses in ‘significant distress’, up 24 per cent year-on-year. This was a reduction of 10 per cent from quarter one 2021, which saw 723,000 in financial difficulties as pent-up consumer demand delivered a boost to help business recovery.
In Shropshire, there was a similar pattern among different sectors. While real estate & property and construction saw 30 and 24 per cent annual increases respectively, it represented an 11 and 12 per cent decrease between quarter one and quarter two. Despite this, businesses are still facing a tough outlook, with Begbies warning that court action is on the rise and September could spell a wave of insolvencies.
Mark Malone, partner at Begbies Traynor in Shropshire, said: “These latest Red Flag figures may show a positive recovery in Shropshire, with pent up consumer demand pulling some businesses out of harm’s way, but the number of zombie businesses remains considerable, with many in a fragile state.
“Covid has dramatically accelerated the UK’s zombie business population, with many businesses taking on unsustainable government backed debts during the pandemic in order to survive. With constant changes to the UK roadmap out of lockdown, many remain in a precarious position, with any future lockdowns likely to impact insolvency rates.
“Whilst 'Freedom Day' on July 19 has given many businesses a sense of normality, history suggests that unmanageable levels of debts and subsequent overtrading will eventually take their toll on these businesses.
“Yet, the last quarter has demonstrated that it is not all doom and gloom for businesses. Consumers want to spend, businesses want to expand and adaptation provides an opportunity for fresh shoots in the economy.”