'There’s very few signs of improvement': Northern Ireland sees sharp rise in business distress, outpacing UK in early warning signs
Critical cases rise 42% year on year while early warning signs hit record highs, with automotive, health and education among the hardest-hit sectors
Northern Ireland businesses are facing mounting financial pressures, with the latest Red Flag Alert data from leading business rescue and recovery firm Begbies Traynor showing sharp rises in both critical and early signs of financial distress.
The data, released quarterly, reveals that the most serious ‘critical’ instances of business distress in Northern Ireland jumped 42% year on year, rising to 1,102 from 776. This increase closely mirrors the UK average rise of 43.8%. Compared with the previous quarter, critical distress in Northern Ireland rose by 18.1%, slightly below the UK quarterly average of 21.3%.
The province, however, saw the largest increase in early instances of ‘significant’ financial distress in the UK. These cases rose 14.6% year on year to 12,463 from 10,873, outpacing the UK average increase of 11.3%. Compared with the previous quarter, early signs of distress in Northern Ireland rose 2.7%, well above the UK average of just 0.3%.
The sectors experiencing the steepest rises in critical distress were automotive (+143.8%), health and education (+103%), and wholesale and industrial transportation (both +100%). In terms of early warning signs of distress, the biggest increases were reported in media (+33.1%), financial services (+26.3%), utilities (+26%), support services (+25.2%), automotive (+24.5%), and travel and tourism and health and education (both +24%).
Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “There are very few signs that any sectors in the UK economy are improving in terms of business distress, with only five of twenty two sectors seeing falling levels of critical distress since the previous quarter, largely seasonally driven, and some particularly hard hit including automotive, health and education which saw the highest rises.”
“Northern Ireland’s businesses managed to outperform the UK average in critical distress, but only slightly, and while that’s welcome, sadly there isn’t really any cause for celebration as we led the UK in early signs of distress.
“The challenges of inflation and mounting costs, coupled with reduced consumer spending that impacts most industries at a varying pace are going nowhere and global uncertainty doesn’t help with long term positives such as investment.
Thomas McKay, managing partner for Begbies Traynor in Northern Ireland, added: “Many regions of the UK saw rising distress that countered the usual seasonal norms for sectors that typically see their best months in the run up the Christmas.
"The rise in early significant distress, which can predict trends in future quarters, is particularly worrying, especially here in Northern Ireland.
“Businesses in the province will have to make even more difficult choices in terms of shaving costs and being creative in finding new markets or products and services to grow revenues if these economic headwinds continue, which certainly looks likely for the coming few quarters,” he added.