The Red Flag Alert data from Begbies Traynor reveals that over 800 more businesses in the province were experiencing ‘significant’ distress, the early signs of financial trouble, by the end of September than at the end of the second quarter of 2020 in June.
Year on year, almost 1,700 more businesses in Northern Ireland were in this type of distress, equating to a 24% increase, and affecting 8,565 firms in the region. Across the UK as a whole, the data showed that ‘significant’ distress had grown by 14% since Q3 2019, with 557,000 businesses now in financial difficulties.
With the courts closed during lockdown, the increase could be much higher given the lack of legal action on insolvent and distressed businesses.
Despite the government’s summer Eat Out to Help Out campaign, which saw more than 100 million subsidised meals sold during August, bars and restaurants remained one of the worst hit sectors. In Northern Ireland, the number of bars and restaurants seeing ‘significant’ financial distressed leapt by 14% year on year with a 9% rise since Q2 and almost 400 hospitality businesses in trouble.
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The popularity of ‘staycation’ holidays has also apparently failed to stem a tide of distress in the travel and tourism sector where businesses in ‘significant’ financial difficulty in Northern Ireland rose by 22% since Q3 2019; and hotels and accommodation saw a 21% uplift year on year.
The province’s real estate and property services firms also continued to struggle, with a 27% increase in early distress in Q3 compared with the same period the previous year, and almost 1,200 businesses in that sector affected in Northern Ireland.
Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said many businesses were reeling from newly-imposed restrictions.
“There are particular concerns about the fate of the high street as leisure and retail businesses approach what should be their busiest time of year, but with much lower than normal lower footfall expected in December and January”, he said.
“While new government grant schemes were announced in early October, there are real fears that, for many businesses, across a myriad of sectors, any funding may come too late to save those that have suffered from closures and disruption.
“In addition to the challenges resulting from the Covid pandemic, businesses are also facing the added uncertainty caused by the increasingly likely possibility that the UK will leave the EU without a trade deal. As ever, seeking professional advice at the earliest opportunity is always the best course of action .”
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