The number of Lincolnshire firms in ‘significant’ financial distress during Q3 2018 has increased by 2% compared to the same quarter last year, according to the latest research data.
Red Flag Alert from Begbies Traynor, a leading UK insolvency firm, monitors the financial health of UK companies. It revealed that during Q3 2018, 5,408 businesses in Lincolnshire were in ‘significant’ distress, an increase of around 100 on Q3 2017. However distress has not risen since Q2 2018, indicating some signs of growing business stability.
Across the UK, 469,006 companies were in ‘significant’ distress – an increase of almost 21,000, or 5%, on Q3 2017. ‘Significant’ financial distress refers to what are considered to be the early warning signs of more serious financial difficulties, including firms that have had minor CCJs filed against them and those showing a marked deterioration in key financial ratios.
In Lincolnshire, as in the country as a whole, this summer’s good weather helped to boost several sectors, including bars and restaurants, which saw distress fall by 12% year on year and by 5% since Q2 2018, leisure and cultural activities (down 4% year on year and 3% quarter on quarter). The region’s automotive sector also experienced a 5% fall in distress, and food and drink saw a 4% drop on the Q3 2017 figures.
Other sectors failed to benefit from the seasonal optimism however, and since Q3 2017 distress rose by 37% in the Lincolnshire financial services industry, by 32% in printing and packaging, and by 19% in real estate and property services.
Gareth Rusling, who heads Begbies Traynor’s Lincoln office, said: “This summer has been a feel-good few months for the economy, but as we move into autumn and winter consumers are tightening their purse strings and retail sales, particularly of food, are declining.
“Coupled with falling house prices and inflation across essentials such as fuel and energy, the effect has been to increase consumer caution, particularly as the economic confusion around the outcome of any Brexit deal persists.”
He added: “As ever, businesses that are quick to adapt in changing times will be the ones that thrive, however all businesses need to focus on the fundamentals – innovation, sales and financial management, as these will be key to staying ahead of both domestic and international competition.”
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