Almost 2,000 businesses in Stoke-on-Trent are in ‘significant’ financial distress as the global pandemic continues to take its toll on the economy.
A new report from insolvency specialist Begbies Traynor found that 1,876 Potteries-based businesses are in financial distress – 21 per cent more than the same period in 2019.
The latest Red Flag alert research – which is based on the last three months of 2020 – found that some sectors in the city faced greater financial difficulty than others, including read estate and property and manufacturing.
And even though some sectors showed signs of relative stability over the past quarter – including telecommunications and IT – businesses are still facing a tough outlook.
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Diane Dunion, partner at Begbies Traynor in Stoke-on-Trent, said: “These figures give an insight into some of the financial stresses that have been building in Stoke-on-Trent businesses over the last year, and many businesses have been dealt another body blow by the latest lockdown.
“2020 was a devastating year for thousands of businesses as they fell deeper into financial distress and the first quarter of 2021 seems to be offering little hope of an upturn in the market.
“The Government’s extended furlough and financial support measures will provide some relief and certainly save a significant number of businesses from entering into insolvency in the short term, however this simply won’t be enough to save every business.
“And although the UK’s announcement of a trade deal with the EU and the roll-out of Covid-19 vaccines offer some light at the end of a very dark tunnel, it is likely to be some time before we see any sort of recovery.”
Nationally – between October and December 2020 – 630,000 businesses are in ‘significant distress’.
This is up 27 per cent year-on-year, and represents the largest numerical quarterly increase (13 percent) in financially distressed companies since the second quarter of 2017 – equivalent to 73,000 ailing businesses.