LONDON (Alliance News) - Business recovery services firm Begbies Traynor Group PLC on Monday said businesses in the UK across nearly every sector showed signs of stability in the quarter following the UK's vote to leave the European Union.
The firm's Red Flag research, which monitors the financial health of companies in the UK, found the number of companies in "significant" financial distress fell by 6.0% in the third quarter to the end of September from the second quarter, down to 248,916 companies from 263,517 in the three months to the end of June.
In the third quarter, Begbies Traynor said 92% of the companies in "significant" distress in the third quarter were small and medium-sized businesses.
Year-on-year, the number of businesses suffering "significant" distress declined by 2.0%, and Begbies said the data "chimes" with recent Office for National Statistics figures which indicated the Brexit vote has had no major effect on the UK economy so far.
In the third quarter, the biggest improvement in financial health was seen in the UK construction sector, where the number of companies in "significant" distress fell 11% compared to the second quarter.
"Overall, the UK economy appears to be in a stronger position than expected following the EU referendum result. While we wait to see whether the government opts for a 'hard' or 'soft' Brexit strategy, businesses at least appear to be better placed to tackle any new challenges on the horizon ahead of the government's imminent negotiations," said Ric Traynor, Begbies Traynor's executive chairman.
"However, given that the details of the future Brexit deal are as yet unknown, it is still too early to tell what longer term impact the 'Leave' decision might have on the UK economy. Clearly though, the stronger the UK economy becomes pre-Brexit, the better it will be able to withstand any post-Brexit shock," he added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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Begbies (BEG)