Recent figures have revealed a rise in Worcester companies being classed as in 'significant' economic distress.

The latest figures from Begbies Traynor’s ‘Red Flag Alert’ set the count at 733 Worcester businesses being at risk of economic failure.

This marks a quarterly increase of 13.8 per cent and an annual rise of 14.4 per cent, as a result of high interest rates, inflation, weak consumer confidence, and increasing and unpredictable costs.

 

 

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The construction and health and education sectors lead the pack with quarterly increases of 28.4 per cent and 77.8 per cent respectively in the number of companies in significant financial distress.

Nationally, the 2023 fourth quarter research recorded 539,900 businesses in significant distress, an increase of 12.9 per cent from the third quarter of 2023 and 5.6 per cent higher than 2022.

Furthermore, businesses near collapse increased by 25.9 per cent in 2023's fourth quarter.

Mark Malone, partner at Begbies Traynor in Worcester, said: "As we start 2024, the UK economy is in a difficult position after a challenging 12 months for businesses, who have had to grapple with multiple macro-economic pressures.

"As a result, we are seeing insolvency rates starting to accelerate."

He pointed out some light at the end of the tunnel, adding: "Later this year, we could see some respite for companies as inflation looks like it may reach more palatable levels, which in turn should result in interest rates starting to decrease from current heightened levels."

Still, he sounds a note for caution, saying: "There are no signs of an easy fix and, with geo-political uncertainty continuing to rise and a hike in the national wage around the corner, the backdrop isn’t improving for an economy that is still firmly in recovery mode post-pandemic.

"For many businesses, I fear soldiering on in this environment will prove to be one step too far."