Rising tide of financial distress sees number of Lincolnshire businesses in trouble up by over a third
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High interest rates and supply chain issues remain persistent problems for many firms and the number of Lincolnshire businesses facing financial problems had increased by more than a third in the year to Q1 2024, according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist Begbies Traynor.
The report found that in Q1 of this year, early-stage or ‘significant’ financial distress had risen by 39% in the region since Q1 2023, affecting 1,600 businesses.
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Hide AdQuarter on quarter, however, the number of ‘significantly’ distressed Lincolnshire firms had risen by just 4%. The region’s economy fared worse than the UK as a whole, which saw a 31% increase in significant distress in the same 12-month period.
Food and drink production was one of the worst affected industries, impacted by both inflation and the decimating effect of the cost-of-living crisis on consumer spending. Food and drink saw an increase in distress of 155% year on year in Lincolnshire, and a rise of 87% since Q4 2023.
Retail also felt a knock-on effect with Lincolnshire food and drug retailers seeing a 100% rise in distress year on year and 41% quarter on quarter. Among general retailers in the region, distress was up 35% year on year and 12% on the previous quarter.
Construction continued to be the sector with the highest number of distressed firms: 304 in Lincolnshire, up 43% year on year, but stabilising to a 2% decrease since the previous quarter.
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Hide AdGareth Rusling, who heads Begbies Traynor’s Lincolnshire offices in Lincoln, Scunthorpe and Grimsby, said: “Beleaguered businesses are struggling in the face of persistently high interest rates, which continue to pile the pressure on.
"Many firms are seeing the costs of servicing debts escalate, at a time when reduced consumer demand is exacerbating financial strains.
“This is compounded by geo-political turmoil and ensuing supply chain disruptions and although economic growth is forecast to rally this year, in the current environment we are advising businesses to keep tight control of their finances and seek professional help at the first signs of trouble to avoid problems becoming insurmountable.”