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Number of businesses in financial distress in the region rises

By James Pugh | Business Picks | Published:

Thousands of businesses are in significant financial distress across the region and the number is on the rise, according to a new report.

These include 2,928 businesses in Shropshire, 1,252 in Wolverhampton, 974 in Walsall, 494 in Dudley and 6,004 in Staffordshire.

The figures come from Begbies Traynor’s latest Red Flag Alert report, which monitors the financial health of UK companies.

In Shropshire, the number of businesses in significant financial distress during the final quarter of 2018 was up five per cent compared with the previous quarter.

Year-on-year, the number of ailing businesses dropped by two per cent, but experts at the independent insolvency firm expect this trend to reverse across the region during 2019.

Shropshire companies in the property and automotive sectors are faring the worst, with those considered to be in significant financial distress having increased by 19 per cent and 11 per cent respectively during the past quarter.

It wasn’t all bad news for businesses in the county, however, with fewer media and financial services firms facing difficulties than in the previous quarter.

In Wolverhampton, the number of businesses in significant financial distress during the final quarter was up one per cent compared with the previous quarter.

Year-on-year, the number of ailing businesses dropped by 13 per cent.

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Wolverhampton food and drug retailers and professional services firms are faring the worst, with those considered to be in significant financial distress having increased by 26 per cent and 16 per cent respectively.

However, there with fewer bars and restaurants and leisure businesses facing financial difficulties than in the previous quarter.

In Walsall, businesses in financial distress was up three per cent, with retailers and property companies faring the worst, up 13 per cent and 11 per cent respectively.

In Dudley, the figure was up five per cent and in Staffordshire it increased three per cent.

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Mark Malone, partner at Begbies Traynor, said: “After a period of relative stability, these figures for Q4 show that businesses have experienced a winter of discontent.

"Customers for traditional shop – front retailers are going online and the uncertainty of Brexit is having an effect on investment in a number of sectors. It seems, for the last quarter at least, that businesses are holding out for a decision on the terms of Brexit in order to see where they stand, which is having a knock-on effect on consumer confidence.

“With 2019 set to be a year of change, businesses – not only retailers – will need to adapt and rapidly evolve to survive.”

Nationally, the report shows the number of businesses in significant distress now stands at 481,000, leaping by 15,000 during the final quarter, after a winter of uncertainty.

The hardest hit sector was real estate and property, which not only saw a seven per cent (3,134) increase in the number of companies in significant distress from quarter three to quarter four, but a nine per cent year-on-year increase, equating to 4,013 extra businesses.

James Pugh

By James Pugh
@JamesP_Star

Shropshire Star Business and Farming Editor.

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