With all the talk about the economic recovery being at our doorstep, further data released this week suggests that businesses’ facing financial distress have decreased by 7% from last year supporting the argument that the worst is behind the UK economy.
According to the data released from Red Flag Alert, businesses within their highest brackets of financial warning dropped from 3,283 in Q1 2013 to 3,063 in Q1 2014. The largest declines were found in the financial services, construction and travel industries with a decline of 31%, 15% and 13% respectively. Although the data does show a slight increase between Q4 2013 and Q1 2014 this is an annual trend accredited to customers over spending during the Christmas period.
Generally the news from the report was positive but there are a few sectors that showed some worrying signs of further hard times. Food retail saw one of the largest areas of growth concerning financial distress with an increase of 86% on last year. Other areas that also highlighted some capacity for concern were general retail (4%), bars and restaurants (7%), media companies (16%) and hotels (23%), each has seen a growth from last year but worryingly also seen a growth between each quarter in 2013.
Although the economy may be on an upward turn has been shown in previous recessions that businesses find this period the hardest to manage their way through. As the interest rate is set to rise it can sometimes be the hardest time period for businesses to operate in, if your business needs advice on any area of financial distress then contact us.