Lancashire sees 27% increase in business distress since EU referendum
Research from the Preston office of insolvency specialists Begbies Traynor, reveals there has been a 27% increase in the number of firms in Lancashire suffering financial distress since the EU referendum.
8,695 businesses in the region were reported as experiencing significant* financial distress at the end of Q3 2019, a 27% increase from the end of Q3 2016 where the figure was just 6,837.
There has also a marked increase in the number of businesses in critical** financial distress during the past twelve months - often a precursor to formal insolvency – with a substantial 33% year-on-year rise.
The latest Red Flag Alert data found that the industries experiencing the greatest levels of distress in Lancashire are Construction (1,290 companies), Support Services (1,162), and Real Estate and Property (846).
Since the EU referendum in June 2016, the construction sector has seen a 13% increase in distress. The support services sector has seen a 32% increase, with the real estate and property sector seeing a worrying 61% increase.
Ian McCulloch, partner at Begbies Traynor in Preston, said: “Three years on from the referendum it is clear that many businesses have struggled with the lack of certainty created by Brexit. As we enter the final furlong in this latest round of negotiations, boardrooms across Lancashire remain uncertain. The nature of the deal Britain is able to strike with the EU, if indeed one is reached at all, will be a huge factor in how businesses across the country, including Lancashire, will perform in 2020.
“Much investment across Lancashire, and in Preston in particular, has been on hold as businesses have held back on big decisions amidst Brexit uncertainty.
Many companies have their hands tied by not knowing what the state of play will be post-Brexit and whether the agreements or contracts they currently have in place will still be valid following Britain’s exit from the EU.
“The substantial increase in critical distress since the referendum is worrying and means that jobs and livelihoods could well be on the line if directors don’t take swift action to remedy this downward trend.”