The number of financially struggling businesses in Lincolnshire region and across the UK economy fell sharply in the third quarter of this year compared to Q2 as a result of the relaxation of Covid regulations this summer, according to the latest Red Flag Alert data, published on 29 October 2021 by leading independent business rescue and recovery specialist Begbies Traynor.
The figures for the three months to September 2021 showed a 14% decline in the number of distressed businesses in Lincolnshire compared to the previous quarter. However, there had been only a 2% year-on-year decline in the number of distressed companies, in comparison with Q3 last year before the second national lockdown was imposed in November.
The new data reveals that a total of 5,900 Lincolnshire firms were displaying symptoms of early-stage or ‘significant’ financial distress in the three months to September, down from 6,800 businesses at the end of June this year. Significant distress refers to companies that have financial problems such as having minor county court judgements of less than £5,000 filed against them.
The UK as a whole saw a 14% drop in significant distress compared to the previous quarter, and a 1% increase year on year.
Gareth Rusling, who heads Begbies Traynor’s Lincolnshire offices in Lincoln, Scunthorpe and Grimsby, said: “It’s encouraging to see levels of distress falling since the previous quarter, showing that many businesses in Lincolnshire and across the country are benefiting from the easing of Covid restrictions.
“However, the multiple challenges of soaring prices and the ongoing scarcity of raw materials, combined with chronic labour and skills shortages, is weighing heavily on businesses across many sectors. Add to this the pressures of escalating fuel costs, severe shortages of lorry drivers and the ensuing supply chain disruption, and it’s clear this is very rapidly becoming a perfect storm for many businesses.
“At a time when government support measures are being withdrawn and many businesses are also having to face up to paying back loans, there are going to be some tough times ahead.”
He added: “While we all hope post-pandemic economic recovery is on the cards, the worry is that too many small businesses will go under before the Government addresses the serious logistical issues resulting from Brexit and Covid. As ever, small businesses that are struggling financially should seek professional help now before their situation becomes more serious.”
In Lincolnshire, industrial transportation and logistics saw a 20% decline in significant distress since Q2 of this year, with 254 businesses struggling. Food and drug retailers saw a 23% decrease on the previous quarter, with distress affecting 139 businesses. Despite a 12% drop in the numbers of construction firms struggling with significant financial distress since the previous quarter, 975 businesses in the region were still affected.
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