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489,000 Businesses are in Significant Financial Distress

489000 businesses face financial difficulty

There are now 489,000 businesses in significant financial distress – up a huge 40% since the referendum.

The latest figures from Red Flag Alert, a business distress tracking system, show there has been a 40% increase in the number of businesses in financial distress since the EU referendum.

The figures also show that the number of business in problems are up 22,000 from Q3 2018.

According to Red Flag Alert, over the last year 20 out of the 22 industries monitored has had an increase in businesses which are in significant financial distress. There has also been a rise of 8% year on year of businesses which are in critical financial distress, this is often a warning of looming insolvency.

The real estate sector has been badly affected with a 16% increase in the numbers of businesses that are in significant financial distress which is the highest across any of the sectors measured by Red Flag Alert. This sector is often thought of as an indicator for the wider UK economy.

Construction has also been hit hard, as has Leisure & Travel, and Retail. All these sectors showed rises in the number of companies which are now in significant difficulty and may be facing an uncertain future.

Rick Smith, Managing Director at Forbes Burton, said:

“The uncertainty of the Brexit situation is having a massive impact on businesses, unfortunately this trend may continue if and when we exit the EU.

“The figures show, especially in regard to the real estate, that we are in a real period of difficulty with the UK economy.

“I do hope that once Brexit is settled it will bring a period of stability that our businesses desperately need to be able to move forward positively.”

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