· 29% increase in financial distress in the region compared to the same time last year.
· However, 10% decrease in distressed Liverpool City Region firms between Q1 and Q2 of 2021.
· Re-opening of economy suggests start of recovery in Liverpool City Region.
10,274 businesses located in the region are now operating under significant financial distress according to the latest Red Flag Alert data for Q2 2021. The quarterly research, produced by Begbies Traynor monitors the levels of financial distress experienced by companies in the Liverpool City Region.
However, the re-opening of the economy made an instant positive impact on the fortunes of firms across the region with an 10% reduction in the number of firms in distress compared to the previous quarter (Q1 2021 saw 11,365 firms from across the region in significant financial distress compared to Q2 2021 which saw 10,274).
Sectors with the highest level of distress in the region by sheer volume of companies are Support Services (1,576– a 23% rise on last year), Construction (1,531 – a 37% rise on last year) and Real Estate & Property (1,413 – a 41% rise on last year).
However, it is worth noting that all three of these key regional business sectors in the Liverpool City Region saw recovery in Q2 of 2021 compared to Q1 of 2021. Support Services saw a quarterly decrease in distress of 11%, Construction saw a 10% reduction and Real Estate & Property a 5% reduction.
Nationally, there are now 651,492 firms who are currently in significant financial distress which is a 24% increase on the same time last year (526,967).
Keith Tully, partner at Begbies Traynor in Liverpool, said:
“The 10% reduction in businesses who are experiencing significant financial distress is certainly welcome news for all business owners and employees in the Liverpool City Region.
“We’re certainly not quite out of the woods yet though and the hard fact remains that there are more than 10,000 companies in our region who are still facing significant financial challenges. That number will be of major concern not only to the company directors running those firms but to other businesses connected to them in the supply chain.”
Jason Greenhalgh, partner at Begbies Traynor in Liverpool, said:
“With recent changes to the UK roadmap out of lockdown and ongoing uncertainties related to the ‘pingdemic’ issue many companies are still in a precarious position. Sadly, any further lockdowns or restrictions introduced later this year could well be the final straw for many of them.
“The ongoing servicing of existing commercial finance arrangements coupled with fresh debt repayments kicking in from bounceback loans and CBILs means it’s likely to be a hard, hot summer for many businesses across our region.”