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.

Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.