There’s cautious optimism for businesses in NI

As the worsening cost of living crisis brings the prospect of another recession closer, the latest data from an independent business rescue and recovery specialist shows that businesses in Northern Ireland performed stronger than those in the rest of the UK in the second quarter of 2022.

The latest Red Flag Alert data, published recently by Begbies Traynor shows that in Northern Ireland, the more advanced ‘critical’ distress saw no change since the same period the previous year while the UK as a whole experienced an increase of 37% year on year. It also revealed that this type of advanced distress in the province had fallen by 8% since Q1 2022, whereas there had been a 3% rise across the UK quarter on quarter.

In terms of ‘significant’ or early-stage distress, businesses in Northern Ireland again fared better than in many other parts of the UK.

In the period from April to June 2022, the province saw this type of distress fall by 16% compared with the same period the previous year, while the national figure was -11%. Comparing performance with the previous quarter, businesses in Northern Ireland saw a 4% decrease in ‘significant’ distress, well below the figure across the UK as a whole which saw no change since the previous quarter.

In the second quarter of 2022, over 8,300 businesses in Northern Ireland experienced instances of early stage distress and this affected almost 582,000 businesses across the UK.

Looking at the different business sectors in Northern Ireland, the worst affected by ‘significant’ distress since quarter one 2022 were leisure and cultural activities up by 7%, hotels and accommodation rise of 5% and food and drug retailers and food and beverages both up by 4%. The sectors which saw the most marked fall in early signs of distress quarter on quarter were printing and packaging (down by 38%), health and education fall of 12% and media -8%.

Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “While it is good news that in the latest quarter Northern Ireland appears to have performed better than some other parts of the UK, in terms of instances of both advanced and early distress, the economic picture here and across the UK is increasingly worrying. With ongoing questions over Brexit, combined with spiralling energy costs and continuing supply chain disruption with further lockdowns in China, it is likely that businesses need to be prepare for some more tough times ahead.

“Given the escalating cost of living crisis, these latest figures are not as bad as some had feared, however, we believe that the impact of rising inflation is yet to be truly felt. The latest GDP figures for May already show a downturn in consumer-facing services with both retail sales and sports activities and recreation falling. As the winter approaches, more people will struggle to pay household bills as they face further energy rises and, in turn, businesses will bear the brunt as consumers cut back on non-essential spending. In such a challenging economic environment, it is more important than ever that businesses keep a close eye on cash flow and turn to professional advice as soon as financial problems become apparent.”