Hundreds of Salisbury companies are now classed as being in ‘significant’ economic distress, according to the latest figures from Begbies Traynor’s Red Flag Alert, which monitors the financial health of UK companies.
Rising interest rates, debt, subdued consumer confidence, high energy costs, and wider economic uncertainty are putting considerable financial pressure on businesses across the region, with 260 at risk of economic failure.
This represents a quarterly increase of 32 per cent, and an annual rise of 9.2 per cent.
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The figures also highlighted particular sector hotspots, with the professional services sector seeing an annual increase of 65 per cent in the number of companies in significant financial distress.
Nationally, the latest Red Flag Alert research for Q3 2023 recorded 478,176 businesses in significant distress, up 8.7 per cent on the prior quarter, with almost 40,000 classed as being in ‘critical financial distress’.
The sectors driving the quarterly increase in critical distress were construction, real estate and property and support services, up 46 per cent, 38 per cent and 28 per cent respectively.
Julie Palmer, partner at Begbies Traynor in Salisbury, said: “This latest data highlights how the debt storm, which has been brewing for years, but had been held off by several measures to provide breathing space for companies, is likely to break.
"Businesses that had loaded up on debt at rock-bottom rates, and were only able to cling on during the pandemic thanks to Government support, must now deal with a financial reality check as higher interest rates hit working capital for the foreseeable future.
“Taken together with stubbornly high inflation and weak consumer confidence, many of these businesses will inevitably head towards failure. While stabilising inflation and interest rates could start to slow the rising levels of distress in the economy, history dictates that this will take some time and insolvencies often peak long after a recovery has started. Unfortunately for many businesses, time is not on their side.”
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