The number of ailing businesses in Hampshire rose by 20% in the first three months of this year according to figures released by Begbies Traynor, the UK’s leading business rescue, recovery and restructuring specialist.
The early warning signs of corporate stress monitored by the company’s Red Flag Alert system reveal that 6,498 local companies are suffering ‘significant ‘ or ‘critical’ difficulty in the eye of the economic storm, with the construction industry bearing the brunt of the damage.
Figures for companies classified as having critical problems – County Court Judgements totalling over £5,000 and/or actions relating to winding-up petitions – were at their highest in January. Overall, the construction sector accounted for 31% of critical and 16% of significant problems experienced between January and the end of March.
Significant cashflow problems – defined as court actions and/or poor, insolvent or outdated accounts – claimed particular casualties among companies providing business-to-business services (17% significant, 23% critical) and those in the general sector which includes leisure, education and healthcare providers (15% significant, 8% critical).
Nationally, the total number of companies showing signs of stress stands at 84,648, though there are signs that the rate of adverse warnings is starting to slow in some sectors.
Antony Fanshawe, partner at the Southampton office of Begbies Traynor commented: “It comes as no surprise that our latest Red Flag figures show an increasing number of businesses succumbing to the effects of the recession.
“Like unemployment statistics, these surveys are a lagging indicator and last week’s Budget tax increases and public spending cuts are unlikely to make life any easier for struggling companies.
“The harsh reality is that the rising number of business failures is likely to continue and, while it is generally acknowledged that signs of slowing deterioration may be putting in a tentative appearance in some areas, there’s no getting away from the fact that financial hardship is going to affect a great many people throughout the rest of this year and into 2010.
“Cash will always be king and the importance of seeking professional advice at the earliest sign of difficulty cannot be overstated.”