10,000 businesses in Northern Ireland 'now in early financial distress'
NEARLY 10,000 businesses in Northern Ireland are now showing signs of early financial distress, according to rescue and recovery specialist Begbies Traynor's latest Red Flag Alert barometer.
That's up 40 per cent on a year ago, and generally reflects UK-wide data, where a total of 630,000 firms have seen their prospects deteriorate.
Northern Ireland did experience a 41 per cent year-on-year quarterly fall in businesses experiencing ‘critical’ distress (which refers to businesses that have had winding up petitions or CCJs totalling more than £5,000 against them).
But it is likely these figures are "just the tip of a very large iceberg" according to Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, because the pandemic has reduced court activity limiting the number of decrees and winding up petitions being issued against indebted companies.
He said: “It's extremely worrying to see such a huge rise in signs of early distress, with so many companies here struggling in the face of a continued fall-off in trade after nine months of almost constant Covid restrictions.
“While instances of more advanced signs of distress have actually fallen, this is probably due to the government’s insolvency prevention measures which, together with pandemic-related financial aid, are masking the true picture.
“We fear our latest research indicates escalating distress with more economic problems being stored up for further down the line, once these support measures are withdrawn.”
Every one of the 22 sectors in Northern Ireland monitored by the Red Flag Alert research experienced double digit increases in ‘significant’ distress in the final quarter of 2020 compared with the last quarter of the previous year.
The region's printing and packaging sector was particularly badly hit with a 116 per cent year on year increase in ‘significant’ distress.