Companies ease out of financial distress

34 per cent decline in "critical" difficulties.

Fewer companies are facing severe financial distress than they were a year ago, in a sign that the economic climate might be improving in the UK

According to the Begbies Traynor Red Flag Alert for Q1, there has a been a 34 per cent decline in companies rated as having “critical” financial difficulties. Across all sectors, the number of companies reduced from 5,000 in the first quarter of last year, to 3283 in Q1 2013.

However, Begbies Traynor warned that the improvement “masks a patchy recovery” and said that sectors reliant on the consumer economy such as retail, leisure, media and real estate had seen an increase in financial distress for the period.

Plus, taken on a quarterly basis, there has been an 8 per cent increase in critical companies from the last quarter of 2012.

The number of leisure companies facing severe financial distress has rocketed by 81 per cent since last quarter, which the report says may be due to unseasonably cold weather in the start of the year. The number of construction companies in critical conditions almost halved compared on last year’s numbers, whereas the real estate sector hs seen fincnail ditress levels rise 24 per cent in the last year.

Julie Palmer, partner at Begbies Traynor, said, “The year on year improvement reflects the continued forbearance and benign monetary conditions facing UK businesses today, combined with an improving credit environment, albeit primarily for larger corporates. Business confidence is slowly returning in the form of greater business spending on both services and investment.”

The report also sounds concern over the lack of funding available to support the SME sector. The number of companies that managed to secure new funding had dropped by 14.5 per cent from a year ago, and down 11 per cent on a quarterly basis.

Palmer added: “The underlying trend is arguably one of an improving picture. However, given the slight increase in distress compared to the previous quarter, it remains to be seen if we are out of the woods yet. With business rate increases planned in April, HMRC’s new PAYE Real Time Information requirements coming into effect, and further minimum wage rises ahead there are still significant headwinds for the UK SME sector, which is typically less able to bear the burden of these changes than their larger counterparts.”

The support services and professional services sectors have seen the strongest recovery in the last year.

This story first appeared on economia

Photograph: Getty Images

This is a news story from economia.

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Gerald Kaufman dies aged 86

Before becoming an MP, Kaufman's varied career included a stint as the NS' theatre critic.

Gerald Kaufman, the Labour MP for Manchester Gorton and former theatre critic at the New Statesman, has died.

Kaufman, who served as the MP for Manchester Gorton continuously from 1970, had a varied career before entering Parliament, working for the Fabian Society in addition to his flourishing career in journalism and as a satirist, writing for That Was The Week That Was and as a leader writer on the Mirror. In 1965, he exchanged the press for politics, working as a press officer and an aide to Harold Wilson before he was elected to parliament in 1970.

Upon Labour’s return to office in 1974, he served as a junior minister until the party’s defeat in 1979, and on the opposition frontbenches until 1992, reaching the position of shadow foreign secretary. In 1999, he was chair of the Man Booker Prize, which that year was won by JM Coetzee’s Disgrace.

His death opens up a by-election in Manchester Gorton, which Labour is expected to win. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.