Number of Merseyside firms in ‘significant’ financial distress teeters on 5,000

• 4% year-on-year increase in the number of Merseyside firms on the brink.
• 9% increase from the previous quarter.
• Professional services sector sees major leap in distress levels  

New data released today by Begbies Traynor in Liverpool reveals the number of Merseyside firms operating on the brink is now close to 5,000 as business challenges mount up for SME’s.

In Q3 of 2023, the number of firms on Merseyside operating in ‘significant’ financial distress was 4,970 according to the research. This is a year-on-year increase of 4.35% (up from 4,763) and a quarterly jump of 9.18% (up from 4,552).

This latest data is sourced from the Begbies Traynor Red Flag dataset which tracks key factors behind company distress and failure rates.

‘Significant distress’ refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth.

The professional services sector on Merseyside saw a remarkable leap in distress of almost 30% (28.66%) as advisory firms feel the effects of distress in other sectors of the regional economy.

The largest volume of distressed businesses are found in a trio of key economic sector hubs on Merseyside region: Construction, Real Estate & Property and Support Services which, together, make up 46% of the total (2,269) number of significantly distressed firms.

The number of significantly distressed firms in the Bars and Restaurants sector, another signal of economic activity, now total 183 local companies, many family-owned, struggling to survive.

Jason Greenhalgh, partner at Begbies Traynor, said:

“If this trend continues, we will see more than 5,000 firms on Merseyside entering significant financial distress before the end of the year. The effects of inflation, high interest rates and energy prices in 2023 are taking their toll and are evident in this data.

“Construction, property and professional services are key sectors of our  regional economy and the sheer volume of firms in distress in these sectors is a worrying indicator as we head towards the end of the year.”

Stephen Berry, partner at Begbies Traynor, said:

“Business owners will be hoping for a glimmer of hope in the form of positive announcements in the Autumn Statement later this month geared towards supporting entrepreneurs. The current global challenges as well as the fact a General Election is looming next year add to an air of uncertainty.

“Ultimately, business owners need to act fast if they find their finances being drained by the burdens they face. The pressure is on for thousands of businesses on Merseyside and the acceleration of insolvency rates we have seen in recent weeks looks likely to continue. Company directors who find their business in financial distress should take swift action before their options run out.”