Distress across construction, consumer-facing industries seeps into Yorks economy

Industry veteran joins Severfield
Credit: Shutterstock.com/ Alex Kosev

Escalating levels of distress is affecting Yorkshire businesses, with the automotive and construction sectors seeing double-figure hikes in distress over the last year.

Moreover, customer-facing industries and sport and health businesses have also been affected by increasing financial problems.

The quarterly Red Flag Alert data – produced by Begbies Traynor – reveals that in Q3 2017 ‘significant’ distress levels rose in Yorkshire, by 23%, compared with the same three months in 2016, affecting 27,339 businesses, while the UK increase over the same period was 27%.

‘Significant’ distress relates to businesses with minor CCJs filed against them, or those showing a marked deterioration in key financial ratios, and is often a precursor to more serious, or ‘critical’ distress, which refers to businesses that have had winding up petitions or county court judgements of more than £5,000 taken out against them.

In Yorkshire, as in the rest of the UK, the construction industry accounts for the largest number of distressed businesses, with almost 4,000 building firms affected in Yorkshire (3,991), a number which has risen by 19% in the 12 months between Q3 2016 and Q3 2017.

Retailers make up the second largest group of distressed businesses: year on year their numbers have risen in Yorkshire from 2,065 in Q3 2016 to 2,468, a hike of 20%.

With double digit increases in significant distress a feature of almost every sector in the Yorkshire economy between Q3 last year and the same quarter this year, some of the most dramatic rises have been in professional services (41%), industrial transportation and haulage (34%), leisure and culture businesses (32%), and media (also 32%).

“The apparently unrelenting upward march of distress levels in Yorkshire and across the whole country is worrying to say the least,” said Julian Pitts, Regional Managing Partner for Begbies Traynor in Yorkshire.

“Businesses in almost all sectors are being hamstrung by the current state of limbo that the Brexit deliberations are creating and we are seeing the toxic effects in these latest figures.”

He added: “As industry seems to have little influence over the Brexit process, the very least that businesses, and particularly SMEs, need to do at this stage is to ensure that they have the most rigorous management structures and procedures in place.

“This will ensure that they are in the most secure position possible to survive any worsening of the economic climate and will be well placed to capitalise on any future economic upturn.”