The number of ailing businesses in Cornwall reached 3,317 in the third quarter of 2022 (July – September), according to the latest figures from Begbies Traynor’s ‘Red Flag Alert’, which monitors the financial health of British companies.
This represents a quarterly increase of 2% in the number of Cornwall businesses that are struggling, but a drop of 2% on the same period in 2021.
Construction businesses in the region are said to be the most affected, with 613 companies in significant financial distress during the past three months. The biggest quarterly gains were seen among hotels & accommodation and retail with both sectors seeing a 10% jump in the number of businesses in difficulty.
Nationally, the latest Red Flag Alert research for Q3 2022 recorded almost 610,000 businesses in significant distress with companies faltering in an economically tumultuous period, characterised by rising costs and fragile confidence. This represents an 8% year on year increase and a 4% quarter on quarter rise.
Commenting on the figures, Scott Kippax, partner at Begbies Traynor in Cornwall, said: “We are in economically turbulent times, where businesses are being battered on multiple fronts by increasing costs in energy, raw materials and labour.
“Coupled with the increased cost of borrowing and the prospect of rising corporation tax now around the corner, this is a very challenging time to be in business. As a region reliant on the visitor economy, it is troubling to see the hotel sector and retailers experiencing the most significant increases in financial distress during recent months.
“The economy, which had already been weakened by two years of pandemic disruption, now faces the very real possibility of a recession at a time when businesses were in desperate need of a sustained period of stability so they could get back on their feet.
“What we have instead is a situation where input costs are soaring and businesses that borrowed to survive for years and are stuck with levels of debt that they may be unable repay – especially with interest rates expected to rise to circa 6% in 2023.
“We’d urge company directors and business owners who are worried about their ability to trade through this difficult period to seek professional advice in order to understand what steps they might be able to take to put them on a stronger footing.”