UK business distress staying near record lows
- UK businesses reporting signs of growth at equal-record highs
- Growth uneven across UK
Levels of UK business growth remain at record highs and business distress near record lows, according to the latest Business Distress Index from insolvency trade body R3.
An equal-record 68% of businesses are showing one key sign of business growth in the latest edition of the long-running survey, while just 35% are showing at least one key sign of distress, slightly up from February’s record low of 33%.
However, the latest Index shows that signs of growth and distress are still uneven around the country. Whereas 73% of businesses in the South are reporting at least one sign of growth, this falls to 69% in the Midlands, and 59% in the North.
Correspondingly, while 34% of businesses in the South and 30% of businesses in the Midlands are reporting at least one sign of distress, this increases to 43% in the North.
R3 president Giles Frampton says: “While it’s good to see growth continuing apace in all the UK’s regions, Westminster needs to bear in mind the fact that the South is pulling further and further away from the rest of the country in terms of economic performance.
R3’s Business Distress Index tracks the number of UK businesses that are: experiencing decreased profits, sales volumes, or market share; regularly using their maximum overdraft; making redundancies; or are investing in new equipment; or are experiencing increased profits, sales volumes, market share, and business growth.
Giles Frampton says: “The Business Distress Index continues to throw up some very positive results. It’s encouraging that business growth isn’t yet showing signs of decelerating and the pace of the recovery is being kept up.”
“Businesses need to be on the lookout for any signs that they’re over-stretching themselves though. Sales, profits, and business expansion may be on the up, but if a business runs before it can walk then problems can emerge.”
Giles Frampton adds: “Logistics, finance, cash flow, and the operational side of a business all need to keep up with a business’ expansion, whether this is geographically or in terms of demand or sales.”
“It’s notable that the share of businesses using their maximum overdraft has been creeping upwards in recent months: some businesses may be using every last drop of credit to keep up with growth.”
UK businesses reporting signs of business growth
UK businesses reporting signs of business distress
The Business Distress Index is carried out for R3 by market research company BDRC Continental via their monthly Business Opinion Omnibus. Telephone interviews with a nationally representative sample of senior financial decision makers at 500 UK businesses, weighted by size, region, and sector took place between 2 and 12 June 2014.