Distressed Devon Businesses Can Plan With Clarity For 2020
Slow economic growth in the final quarter of 2019 has left thousands of businesses across Devon in ‘significant’ financial distress, according to a new report from leading business recovery consultancy firm Begbies Traynor.
However, with a clear Brexit path, those companies should be able to plan for 2020 with greater clarity, demonstrating their product or service and environmental credentials, says Exeter-based Begbies Traynor partner Ian Walker.
Devon saw a one per cent increase in the number of businesses struggling between Q3 and Q4 2019 – now 7,093 – which is also slight increase on the same period in 2018.
The Red Flag Alert data for Q4 2019, which monitors the financial health of UK companies, reveals that nationally, 494,000 UK businesses are in significant financial distress – the highest number recorded by the research – with the real estate and property, support services, construction and retail sectors particularly badly affected.
This is a rise of 81 percent since 2016, and a significant number of these companies were formed after 2014, demonstrating that younger businesses are the most vulnerable to failure.
When looking at sectors in Devon that are in financial difficulty, leisure & cultural and hotels & accommodation businesses are in the most distress – increasing nine percent and seven percent respectively between Q3 and Q4 2019.
More positively, the figures also revealed that some sectors in Devon are showing tentative signs of stability during the same time period, with the number of troubled firms in financial services and retail down on the previous quarter.
Ian Walker, partner at Begbies Traynor in Exeter, covering the South West, commented:
“Businesses and the UK economy as a whole will want to avoid a repeat performance of 2019, where distress increased to record levels on the back of ongoing uncertainty around Brexit. However, the macro-economic climate is complicated, and we are seeing clear winners and losers, as evidenced by this latest Red Flag data. Currently, we do not know if the failing performance within some sectors is due to short term confidence issues, or more fundamental economic and structural issues. The landscape of UK business is slowly changing. In order to capture the attentions of consumers and clients, businesses need to demonstrate that they not only have a compelling product or service at the right price, but also one that has strong environmental credentials to boot.“
Photo by Rob Coombes