More than 10,000 firms in Lancashire now in 'financial distress'
Lancashire has seen a 15% surge in the number of firms operating under significant financial distress despite Government support schemes, according to new data released today by Begbies Traynor in Preston.
The latest Red Flag Alert data for Q3 2020 has recorded a 15% year-on-year increase in the number of distressed firms in the region bringing the total to 10,034.
High profile sectors of the local economy took a battering in the third quarter of the year. 91% of the business sectors analysed by Begbies Traynor for this report saw volumes of distress rise an average of 8% compared to the previous quarter.
With Lancashire currently subject to the most restrictive of lockdown measures, experts at Begbies Traynor warn of further pain ahead if directors don’t take swift action.
The closure of hospitality venues and nightspots combined with social restrictions contributed to a 19% year-on-year increase (up from 305 businesses to 363) in significant financial distress in the Bars & Restaurants sector.
During the period of ‘Eat Out to Help Out’, the Government’s campaign to support the sector, more venues fell into significant distress with a 9% rise on the previous quarter (from 334 to 363).
220 gyms now teeter on the brink as the Sports & Health Clubs sector saw an 11% increase in the number of distressed companies.
Hotels & Accommodation has seen a 28% increase in distress (from 112 firms up to 143) as venues struggle with events being cancelled or postponed and visitor numbers curtailed for the foreseeable future.
Property and Real Estate saw a 24% increase in distress (from 850 up to 1,058) and Construction saw a 15% rise (1,288 up to 1,481). Combined, these key sectors of the regional economy total 2,539 companies who are now in significant financial distress.
Ian McCulloch, partner at Begbies Traynor’s Preston office, said: “These figures are a stark reminder of the challenges business owners face in keeping their business afloat as we head into a period of tighter restrictions. Bars and restaurants which are such an important part of the night-time economy in Preston, and indeed across the entire region, continue to face serious pressure.
“This impacts not just national chains such as Gourmet Burger Kitchen who recently entered administration and Pizza Express who confirmed closures, but also family-owned, independent venues across Lancashire who are fighting tooth and nail to survive.
“The decisions that company directors in all business sectors take over the coming weeks will be critical to the survival of many firms across our region. In many cases company directors will need to restructure not only their finances but also their operations and infrastructure to weather the winter ahead.
“The window of opportunity business owners have to seek fresh options with creditors will shrink rapidly as we enter the latter stages of 2020.”