Rising interest rates and costs squeeze South Yorkshire businesses, report finds
The latest Red Flag Alert data from recovery specialist Begbies Traynor found 9,189 businesses in South Yorkshire were suffering early or “significant” distress in the last quarter - a 7.2 per cent increase on the same period in 2022 and up 5.6 per cent on the first quarter of this year.
“Significant” distress refers to businesses showing deterioration in key financial ratios and indicators.
Across the UK, this measure was up by 8.5 per cent in the second quarter of this year compared to the same period last year, with a total of 438,702 businesses affected.
Support services, construction and real estate and property services are feeling the pinch worst, said the report. Six of 22 sectors monitored in South Yorkshire saw increases of over 10 per cent in the number of companies in significant financial distress compared to a year ago.
Kris Wigfield, managing partner at Begbies Traynor, said: “Consumers and businesses have both been hit hard by higher interest rates and there are mounting concerns that the situation may be set to worsen in the second half of this year in South Yorkshire and across the UK, when winter sets in and energy costs go up.
“Businesses are also seeing the cost of their debt rising and, still reeling from the effects of the pandemic and set back by higher energy bills and the effects of the war in Ukraine, it’s no wonder that the number of distressed companies has increased since last year.
“Our advice to businesses is to monitor their financial position carefully, and seek advice from qualified restructuring professionals as soon as any problems become apparent.”