Businesses in Northern Ireland are experiencing escalating levels of ‘critical’ distress with the latest figures suggesting construction and retail in the province are experiencing far greater pressures than the rest of the UK.
The new data for the first quarter of the year from insolvency specialist Begbies Traynor shows this type of advanced distress rose dramatically both compared with the first and last quarters of 2018.
The latest quarterly Red Flag Alert data released today (29 April 2019) shows that in the first three months of 2019, the number of businesses in Northern Ireland in ‘critical’ distress (which relates to businesses with minor CCJs against them and those showing a marked deterioration in key financial ratios) was 128% higher than in the first three months of 2018.
This compares with a year on year rise in ‘critical’ distress of just 17% across the UK as a whole.
Northern Ireland’s largest sector, construction, saw one of the most dramatic leaps in year on year ‘critical’ distress in the first quarter of 2019 with 15 building companies now affected compared with just four in Q1 2018.
In contrast, advanced distress in construction across the UK as a whole grew by just 13% over the same period.
In the province, ‘critical’ distress in construction also saw a marked rise since the previous quarter, increasing by 114% whereas it rose by just 11% across the UK as a whole.
Northern Ireland also suffered from the ongoing woes facing the high street with retail seeing a 100% uplift in advanced distress between January and March 2019, compared with the same period the previous year.
This trend was even more marked quarter on quarter, with four retailers in the province suffering from ‘critical’ distress compared with just one in Q1 2018.
However, across the UK as a whole, advanced distress in the retail sector fell by 5% year on year, and by 2% quarter on quarter.
The rate of increase in ‘critical’ distress across all sectors had also shown marked growth since the previous quarter, with levels rising by just 86% in Northern Ireland, compared with a rise of just 6% across the UK.
“Unfortunately, we are continuing to see an upsurge with advanced distress here as both businesses and consumers face the unknown,” said Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland.
“One of our most important sectors, construction, is bearing the brunt which is likely to have a knock-on effect on many other sectors.
“We are also seeing falling consumer confidence adding to the many challenges facing retail.
“However, on a more positive note, the global popularity of the Game of Thrones TV series is helping to bring more visitors to the province with falling levels of both early and advanced distress in travel and tourism.
“While the latest official figures for the first quarter of 2019 show that unemployment in Northern Ireland was even lower than in the rest of the UK, there are concerns that we are seeing growing redundancies as more businesses fail, and this too will have a negative impact on the economy.”
Looking at levels of ‘significant’ or early distress (which refers to businesses that have had winding up petitions or CCJs totalling more than £5,000 against them), 6,781 businesses in in the province were affected in Q1 2019, a 1% fall compared with Q1 2018.
In Northern Ireland, levels of this type of early distress showed no change between the final quarter of 2018 and the first quarter of 2019.
Across the UK, there was a 2% rise in ‘significant’ distress year on year, and a 1% rise quarter on quarter.