More than 1,700 companies in Cornwall 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.
High interest rates and inflation, alongside weak consumer confidence and rising and unpredictable costs, are the key factors putting considerable financial pressure on businesses across the region, with 1,773 at risk of economic failure. This represents a quarterly increase of 6.7%, and an annual rise of 16.3%.
The figures also highlighted particular sector hotspots, with the professional services and construction sectors seeing quarterly increases of 17.1% and 11.8% respectively in the number of companies in significant financial distress.
Nationally, the latest Red Flag Alert research for Q4 2023 recorded 539,900 businesses in significant distress, which was 12.9% higher than Q3 2023 and 5.6% higher than the same period in 2022. The levels of ‘critical’ financial distress also jumped dramatically in Q4 2023, up 25.9% on the prior quarter leaving more than 47,000 businesses near collapse in the UK at the start of 2024. The key sectors driving this increase were the construction, real estate & property and support services sectors, up 32.6%, 24.7% and 23.6% respectively.
Commenting on the figures, Scott Kippax, partner at Begbies Traynor in Cornwall, said: “As we start 2024, the UK economy is in a difficult position after a challenging 12 months for businesses, who have had to grapple with multiple macro-economic pressures. As a result, we are seeing insolvency rates starting to accelerate.
“However, later this year, we could see some respite for companies as inflation looks like it may reach more palatable levels, which in turn should result in interest rates starting to decrease from current heightened levels.
“That said, there are no signs of an easy fix and, with geo-political uncertainty continuing to rise and a hike in the national wage around the corner, the backdrop isn’t improving for an economy that is still firmly in recovery mode post-pandemic. For many businesses, I fear soldiering on in this environment will prove to be one step too far.”
