Rising Financial Woes for Yorkshire Businesses

The most recent data from Begbies Traynor, a prominent business rescue and recovery specialist, has uncovered a troubling trend for companies in Yorkshire. The findings indicate that the number of businesses facing critical financial distress has risen by almost a third in the final quarter of 2023.

Over a period of just three months, the region experienced a 32.4% increase in severe distress, impacting a total of 3,303 businesses. This represents an 18.3% year-on-year growth in severely distressed firms. Notably, Yorkshire saw a sharper rise than the UK as a whole, which witnessed a 25.9% increase in critical distress compared to the previous quarter.

The data also demonstrates a significant rise in less severe, yet still substantial, distress. This category saw a 13.1% increase in Yorkshire since Q3 of 2023, and a 9.2% rise since Q4 of 2022. These figures surpass the UK average, indicating a growing trend of financial instability among businesses in the region.

Julian Pitts, Begbies Traynor’s regional managing partner in Yorkshire, clarified that critical distress refers to businesses with county court judgments of more than £5,000 against them, often signaling an impending cessation of trade. He stressed that the substantial surge in severely distressed businesses is likely a consequence of high interest rates, escalating inflation, and weakened consumer confidence. Pitts urged struggling businesses to seek professional advice in order to mitigate the risk of insolvency.

When examining the data by industry, Yorkshire’s construction sector faced the highest number of critically distressed firms at the close of 2023, with 604 businesses affected—an increase of 30.7% from the previous quarter. Real estate and property services firms also experienced a concerning 35.4% surge in severe distress, while professional services saw a considerable 51.5% hike.

The report paints a concerning picture of the financial landscape for businesses in Yorkshire, as they contend with a myriad of economic challenges. Moving forward, it is crucial for businesses to proactively address their financial vulnerabilities and seek the necessary support to navigate these turbulent times.