Northern Ireland sees financial distress steady in first quarter of 2024

In Q1 2024, there was a fall of just below 1% in the number of businesses in Northern Ireland experiencing ‘significant’ or early-stage financial distress compared with Q4 2023. In the last quarter, under 9,000 businesses in Northern Ireland were affected by 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).

The province also saw a fall in the more advanced ‘critical’ distress which dropped by 3.9% quarter-on-quarter, affecting 718 businesses. However, while critical distress fell by 3.5% year-on-year in Northern Ireland, incidences of early distress rose by 21.4%.

Northern Ireland’s performance compares well with the UK-wide figures which saw 30.8% more businesses across the UK experiencing a year-on-year increase in early distress, representing more than 554,550 businesses. There was a 2.7% rise in UK-wide levels of significant distress quarter-on-quarter.

Across the UK, there was a 20.1% rise in critical distress since Q1 2023, and a 15.4% fall since Q4 2023. with over 40,170 businesses affected.

In Northern Ireland, half of the 22 sectors analysed saw falls in significant distress in the first three months of 2024 compared with the final quarter of 2023. Those performing most strongly in the province included health and education, down by 20.7%; professional services (down by 20.4%); print and packaging (down by 19%); and utilities (down by 18.5%). In contrast, the sectors with the most marked increases in early distress compared with the previous quarter were food and beverage with a 30.5% rise; bars and restaurants, up by 20.2%; and sports and health clubs with a 19.9% rise.

Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “While businesses in Northern Ireland appear to be coping relatively well with the onslaught of financial pressures they are facing, there’s no doubt that times are tough as sticky inflation continues to impact consumer spending. For example, we’ve seen a spate of restaurant closures here in recent months with people tightening their belts as they struggle to cope with inflation and high interest rates.

“This, together with an increasingly unstable global picture, makes the future far from certain. In such a difficult economic environment, businesses would be well advised to proceed with caution and turn to insolvency professionals for help at the first sign of financial trouble.”