Number of firms on Merseyside in ‘significant’ financial distress now surges past 5,000

• 4% year-on-year increase in the number of Merseyside firms on the brink.
• 13 % increase from the previous quarter alone.
• Key sectors of property, professional and support services make up bulk of distressed firms.

Fresh data released today by Begbies Traynor reveals the number of firms on Merseyside starting 2024 on the brink has now surged past 5,000.

In Q4 of 2023, the number of firms on Merseyside operating in ‘significant’ financial distress was 5,596 according to the research. This is a year-on-year increase of 3.59% (up from 5,402) and an alarming quarterly jump of 12.6 (up from 4,970).

This latest data is sourced from the Begbies Traynor Red Flag dataset which tracks key factors behind company distress and failure rates.

‘Significant distress’ refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth.

The biggest double-digit percentage leaps in distress compared to the previous quarter were seen in Printing & Packaging (58%), Travel & Tourism (38%) and Financial Services (27%).

The largest volume of distressed businesses are found in the quartet of key economic sector hubs in the Lancashire region: Construction, Real Estate, Support Services and Professional Services which, together, make up more than half (54%) of the total (3,027) number of significantly distressed firms.

Stephen Berry, partner at Begbies Traynor in Liverpool, said:

“2024 has been a challenging start for SMEs on Merseyside. There’s no doubt that the build-up of pressure from last year continues to have a major impact and this latest data demonstrates the size of the problem for businesses in our region.”

“Recent inflation figures announced compound the threats even further for business owners struggling to stay on top of things as those in their supply chain pass greater costs on in order to survive.

“The fact that more than half of these companies in significant distress operate in the traditionally strong sectors of construction, property, professional and support services is of grave concern for everyone doing business in these areas” 

Jason Greenhalgh, partner at Begbies Traynor in Liverpool, added:

“With a General Election looming later this year, it is feasible we could see further support for businesses being announced in the next Budget. It remains to be seen whether this would be too little too late for many of the firms in our region included in our numbers.

“These new figures are a stark reminder for company directors on Merseyside to act quickly and decisively in order to generate more options for rescue than if they bury their heads in the sand.”