More Businesses Showing Signs Of Financial Distress In 2nd Quarter

The latest report by independent business rescue and recovery specialist Begbies Traynor shows that more businesses were showing signs of financial distress in Northern Ireland in the 2nd quarter of this year than in the 1st quarter. This mirrors the rest of the UK and is a real concern. It does show that the turmoil of the last few years has left its mark and is still having an effect on many businesses right across the UK.

Number Of Businesses Experiencing Early Stage Financial Distress

Here are some figures from this report, as copied from an article on the Business Eye website:

‘In the period from April to July 2024, there was an increase of 8.5% in the number of businesses in Northern Ireland experiencing ‘significant’ or early-stage financial distress compared with the previous three months. In Q2 2024, the province saw an additional 9,750 businesses experiencing this type of distress (which refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth). This represents a year-on-year rise in ‘significant’ distress in Northern Ireland of 32.1%.

‘The province also saw more advanced ‘critical’ distress on the rise – up by 3.2% quarter-on-quarter and by 13.1% year-on-year, with another 741businesses now suffering from this type of distress.

‘The picture in Northern Ireland was close to that seen across the UK as a whole. Early-stage distress rose by 8.6% since Q1 2024 and by 36.9% compared with the same quarter the previous year, affecting  almost 602,000 businesses nationwide. The more advanced ‘critical’ distress increased by 1.1% across the UK since the previous quarter and by 34.5% since Q2 2023, affecting over 40,600 businesses.

‘Looking at ‘significant’ distress across the sectors In Northern Ireland, ten of the 22 sectors analysed saw double-digit rises in the second three months of 2024 compared with the first quarter of the year. Those worst affected were industrial transport (up by 26.2%); hotels and accommodation (up by 25%); retail (up by 24.9%); and automotive (up by 23.1%).

‘In contrast, four sectors experienced quarter-on-quarter falls in early-stage distress. These were travel and tourism (down by 19.1%); utilities (fall of 5.7%); wholesale (fall of 1.7%); and food and beverages (fall of 1.5%).’

The transition to Brexit, and the pandemic, have certainly made their mark, and so we need a long period of sustained calmer waters and economic recovery so that businesses can shake off the cloud left by these issues and move forward with real confidence.