LONDON (Alliance News) - Corporate recovery and professional services firm Begbies Traynor Group PLC said Wednesday there are 33% more companies in financial distress than there were before the triggering of Article 50 at the end of March 2017.
According to its own 'Red Flat' research for the first quarter of 2018, there were 477,210 business in "significant" financial distress at the end of the period, compared to 358,943 a year before.
Every sector and region recorded more companies in distress. The worst affected sectors, Begbies Traynor said, were Support Services, Construction, Real Estate & Property, and Telecommunications, which recorded increases in distressed firms of 40%, 26%, 46%, and 47% respectively.
Executive Chairman Ric Traynor said: "The UK's crucial Services sector experienced a major slowdown last month, as the impact of snow disruption, inflation and Brexit-related uncertainty hit output across the sector, while the Automotive industry has also experienced a downward trend, with declining car sales, job cuts and growing fears about restrictive future trade barriers with Europe.
"At the same time, the UK Construction sector last month suffered its biggest drop in activity since the 2016 Referendum vote, as Brexit concerns and the fallout from Carillion's collapse caused further delays in large infrastructure and construction projects."
Traynor added: "While the recent recovery in sterling should put UK businesses who import raw materials into a stronger trading position, the biggest positive impact on business confidence is likely to come when we finally receive clarity over how our eventual exit from the EU will look. In the short term however, the most pressing issue is whether or not the Bank of England decides to raise interest rates next month. If they do, it could push many struggling businesses, particularly those with high levels of debt, into formal insolvency."
Shares were down 0.7% on Wednesday at 68.40 pence each.
Begbies (BEG)