Report: Huge hike in serious financial distress in Northern Ireland as over 9,000 businesses suffered in the final three months of 2023

Businesses in Northern Ireland have experienced a massive uplift in advanced financial distress in the final quarter of 2023 as businesses and consumers continue to struggle in the face of ongoing pressure from rising costs, according to the latest Red Flag Alert data.

Belfast independent business rescue and recovery specialist Begbies Traynor said that in Q4 2023 there was a 38.9% rise in levels of businesses in Northern Ireland seeing advanced or ‘critical’ distress compared with the previous quarter. This type of severe distress is now affecting almost 747 businesses in the province. However, the year-on-year picture was more encouraging with an 8.9% fall in critical distress.

Some sectors were particularly badly hit with utilities seeing a quarter-on-quarter rise in critical distress of 300%; food and drug retailers (+180%); transport and logistics (+129%); professional services (+108%); and leisure and cultural activities (+56%).

Only two sectors in Northern Ireland saw critical distress fall since the previous quarter – financial services fell by 25%; and wholesale by 12%.

The less advanced ‘significant’ 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) also saw a rise in Northern Ireland, increasing by 20.5% quarter-on-quarter; and by 7.1% compared with the same period in 2022.

More than 9,000 businesses in Northern Ireland suffered from significant distress in the final three months of 2023.

Across the UK, there was a 25.9% uplift in critical distress in the last quarter of 2023 compared with the previous quarter, with almost 47,500 businesses now affected. Instances of significant distress nationally also increased by 12.9% quarter-on-quarter, and by 5.6% year-on-year, representing a total of 539,900 businesses.

Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “While the economic picture across the UK is far from rosy, it is extremely worrying to see Northern Ireland experiencing one of the sharpest increases in advanced critical distress since the previous quarter. Having taken on debt when interest rates were low, growing numbers of businesses are now paying the price.

“With the cost of living crisis impacting consumer spending and continuing high inflation, businesses within Northern Ireland are struggling to regain stability and, unfortunately, many of these businesses may now be on the road to insolvency. It is imperative that these businesses should seek professional advice as soon as they can, to avoid financial problems from escalating.”