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Home » North West Firms In Distress Rise By 33% In Consumer Squeeze

North West Firms In Distress Rise By 33% In Consumer Squeeze

The number of North West firms in significant distress has increased by a third in the last year, new figures reveal.

The information from the latest Begbies Traynor Red Flag report found 58,599 firms in the region suffering from significant distress in the first three months of 2024, a 33% rise from the same period last year. The business advisory firm defines significant distress as businesses showing deterioration in indicators including those measuring working capital, contingent liabilities, retained profits and net worth.

That rise is faster than the national average, with Begbies Traynor attributing problems facing businesses to cuts in consumer spending during a time of high inflation and rising interest rates. Sports and health clubs, food and drug retailers and general shops saw significant increases in businesses in distress, but the construction, real estate, support services and professional services sectors continued to make up almost half (49%) of the total number of significantly distressed firms.

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Gary Lee, partner at Begbies Traynor in Manchester, said: “These figures clearly demonstrate the huge challenge that businesses are facing in enticing people to part with their hard-earned cash not only on discretionary items like clothing and gym memberships but everyday necessities like food.

“The fact that almost half of all businesses operating in significant distress are in four of the key economic sectors in the region is alarming and will obviously have a knock-on effect throughout the remaining 18 sectors we analysed. These new figures are a reminder for company directors in our region to act swiftly and decisively in order to generate more options for rescue when in trouble rather than putting off the challenge for another day. There are no indications the situation is going to get dramatically better for businesses as we progress through 2024.”

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