Friday, December 27, 2024

Rising Financial Distress In Northern Ireland During Q2 2024 – Business Eye

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After a strong start to the year with falling financial distress in the first three months, Northern Ireland saw distress increase once again in Q2 2024 compared with both Q1 2024 and the same period the previous year, according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist Begbies Traynor.

In the period from April to July 2024, there was an increase of 8.5% in the number of businesses in Northern Ireland experiencing ‘significant’ or early-stage financial distress compared with the previous three months. In Q2 2024, the province saw an additional 9,750 businesses experiencing this type of distress (which refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth). This represents a year-on-year rise in ‘significant’ distress in Northern Ireland of 32.1%.

The province also saw more advanced ‘critical’ distress on the rise – up by 3.2% quarter-on-quarter and by 13.1% year-on-year, with another 741businesses now suffering from this type of distress.

The picture in Northern Ireland was close to that seen across the UK as a whole. Early-stage distress rose by 8.6% since Q1 2024 and by 36.9% compared with the same quarter the previous year, affecting  almost 602,000 businesses nationwide. The more advanced ‘critical’ distress increased by 1.1% across the UK since the previous quarter and by 34.5% since Q2 2023, affecting over 40,600 businesses.

Looking at ‘significant’ distress across the sectors In Northern Ireland, ten of the 22 sectors analysed saw double-digit rises in the second three months of 2024 compared with the first quarter of the year. Those worst affected were industrial transport (up by 26.2%); hotels and accommodation (up by 25%); retail (up by 24.9%); and automotive (up by 23.1%).

In contrast, four sectors experienced quarter-on-quarter falls in early-stage distress. These were travel and tourism (down by 19.1%); utilities (fall of 5.7%); wholesale (fall of 1.7%); and food and beverages (fall of 1.5%).

Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “While the UK saw slight growth in May with a better-than-expected rise in GDP, with consumer spending still subdued, businesses desperately need a sustained economic recovery after the turmoil of the last few years.

“Unfortunately, after battling the challenges of Brexit and a pandemic, followed by the cost of living crisis, many are now struggling to survive. While it is to be hoped that the UK can look forward to a more stable environment over the next few years, with other global changes afoot, we advise businesses to proceed with caution. It is always best to be proactive and approach professionals for advice at the first signs of financial problems when the situation can more easily be brought under control.”

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