Business feeling the squeeze in the local economy

BAD TIMES Julie Palmer, partner at Begbies Traynor
BAD TIMES Julie Palmer, partner at Begbies Traynor
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A MAJOR report has found that many more businesses nationally are suffering from the economic squeeze.

And Julie Palmer, partner in the Portsmouth office of Begbies Traynor, the corporate recovery specialists which compiled the Red Flag report, said the sector worst hit was the leisure industry.

In the south east, 47,349 firms had significant difficulties in the first quarter of this year, with 344 of those in Portsmouth.

That is compared with 40,928 in the same period last year, a 16 per cent increase.

Those firms reporting ‘critical problems’ was up four per cent to 1,122, with 12 of those in Portsmouth.

Nationally, a total 186,554 businesses experienced significant or critical financial problems in the first quarter, compared with 161,601 in the same period last year, which is an increase of 15 per cent.

Companies with significant problems are those with either a court action or poor insolvent or out-of-date accounts.

Firms with critical problems are those with County Court Judgements totalling £5,000 or more or Wind-Up Petition-related actions.

Ms Palmer said: ‘The number of UK companies facing critical problems has risen year on year with significant increases across the leisure sector in particular.

‘Compared with our figures for food retail which show little change, it seems likely that a fall in consumer confidence and spending power driven by anticipated job losses lies at the core of the leisure sector’s troubles.

‘High levels of legal actions taken against debtors indicate that creditors are attempting to maximise cash collection right across their customer base.

‘The hike in oil prices and January’s VAT increase has made cash flow and credit control essential priorities for most businesses with some seeking payments through the courts.’