Ashleigh Fletcher, director at rescue and recovery specialist Begbies Traynor in Sheffield, takes a look at the financial health of businesses in the region.
As Sheffield City Region continues to rebuild its economy, our latest quarterly Red Flag Alert research, which monitors the health of corporate UK, shows that for some industries there has been a more dramatic surge in financial problems over the last 12 months.
While ‘significant’ business distress across all sectors in Yorkshire year on year rose 20 per cent in the first quarter, the same increase as for the UK as a whole, conditions are proving particularly challenging for some key sectors.
Yorkshire’s hotel, travel and leisure industries, along with the region’s food and drink producers, are suffering a marked increase in distress as the relentless competition between the major supermarkets continues and consumers remain cautious about discretionary spending.
The clash between the major supermarkets continues to push the region’s food and drink producers to the limit with a 22 per cent rise in signs of financial distress in Q1 2016 compared to the first three months of 2015. The high concentration of food and drink producers in Yorkshire leaves the region particularly vulnerable to the actions of the major supermarkets.
Aggressive pricing by the supermarkets and tighter control over costs continues to take its toll on these businesses, many of which have been ill prepared for the lengthy war of attrition they find themselves caught up in.
Consumer spending on leisure is also on a downward trajectory as economic uncertainty and rising property prices dampen the enthusiasm for spending.
Yorkshire’s sport and health sector saw a dramatic 48 per cent rise in ‘significant’ distress, the early signs of financial problems, compared with Q1 2016. Travel and tourism also showed an increase, with a year-on-year hike of 24 per cent.
Bars and restaurants across the region were also badly affected with 1,186 businesses struggling to make ends meet, a 26 per cent increase year on year.
Unfortunately, with uncertainty caused by the looming EU referendum and the possible disruption of a Brexit, it looks likely that there are more challenges ahead for the region’s businesses.
For further information about any business recovery, rescue, or insolvency-related issues, please contact Ashleigh on 0114 2755033.