PROPERTY and technology companies are bearing the brunt of the economic jitters plaguing the economy in Milton Keynes, says new research.
The number of ailing businesses in financial distress reached 2,989 in the fourth quarter of 2022, according to the latest figures from business recovery specialist Begbies Traynor’s Red Flag Alert, which monitors the financial health of British companies.
This represents a quarterly increase of 5% in the number of struggling businesses and an annual rise of 4%.
The real estate and property sector has seen a year-on-year increase of 13% in the number of companies in significant financial distress. Telecoms and IT saw an annual rise of 6%.
Julie Palmer pictured, partner at Begbies Traynor in Milton Keynes, said: “Many of the companies captured by the Red Flag Alert are SMEs without the financial firepower larger enterprises have to fall back on. We should be applauding the directors of these smaller companies which make up the backbone of the UK’s economy for the incredible tenacity they have shown for so long.
“However, we are talking calls from company bosses who are facing multiple challenges to keep their businesses afloat. They are dealing with a gloomy economic outlook with inflation at 40-year highs and interest rates at levels not seen for 14 years. As a result, more and more companies are starting to feel the burden of their debts, making directors question whether they can go on.”
Nationally, the Red Flag Alert research for Q4 2022 recorded 610,405 businesses in significant distress. The figure is up by 24% on distress levels in pre-Covid times in Q4 2019 and highlights the intense strain an increasing number of companies are under as they are hit by rising labour and materials costs, increasing energy costs and an economy facing recession.
The most recent County Court Judgements, which are considered a leading indicator of financial distress, are also climbing rapidly. There were 23,885 CCJs in the final quarter of 2022, a 52% rise in the level compared to the same period a year ago. Winding Up Petitions – a much more serious legal action lodged by creditors – totalled 576 in the same period, a rise of 131% on 2021.
Ms Palmer said: “We came into 2022 hopeful that the pandemic was behind us and better times were ahead, only for Russia’s invasion of Ukraine to unsettle the global economy, leading to spiralling inflation and soaring energy bills and laying the foundations for what looks like a global recession. In the UK in particular, strike action is also piling on the pressure as staff struggle to get to work and customers stay away.”