Signs that business distress may have stabilised in the first three months of this year, according to figures published by independent business rescue and recovery specialist Begbies Traynor, are likely to be dramatically reversed as the global economy starts to feel the devastating impact of the war in Ukraine and soaring energy prices.
The latest quarterly Red Flag Alert data from Begbies Traynor reveals a 22 per cent drop in ‘significant’ or early-stage distress in Yorkshire, compared to the first quarter of last year when the country was in lockdown, and a two per cent fall compared to the final quarter of 2021. Across the UK as a whole, significant distress fell by 20 per cent year on year and one per cent since the previous quarter.
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “While at first glance these latest business distress figures seem to paint a relatively optimistic picture of businesses in Yorkshire, and the whole of the UK, beginning to emerge from the enormous challenges of the past two years, unfortunately they do not take into account the two most recent global developments that are already beginning to shake the economy to its core.
“The gathering storm of the war in Ukraine, and the sharp rise in energy prices and escalating cost of living crisis which the conflict is set to exacerbate, will inevitably put enormous strain on business across almost every sector.
“For small-business owner-managers in particular, it’s now essential to be as structurally and financially well prepared as possible. Seeking advice at the first signs of financial distress is also a wise move and means that more options are available to take positive action.”
In Yorkshire the decline in business distress was seen across the whole economy in the first three months of 2022 compared with Q1 2021. Printing and packaging saw a 29 per cent year on year fall, as did food and drug retail, while automotive industry distress in the region dropped by 28 per cent .
In Q1 of 2022, compared to the final three months of 2021, distress continued to fall gradually across the economy, with only real estate and property services seeing a slight increase (three per cent) in financial difficulties.