Cases of financial problems in Humber companies increased in the last quarter of 2021 – however, remained lower than the rest of the UK.
The impact of the latest Covid variant appeared to limit early signs of economic recovery, according to the latest Red Flag Alert data released by leading independent business rescue and recovery specialist Begbies Traynor.
A three percent increase in significant distress was witnessed in the previous three months compared to five percent nationwide.
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Andrew Mackenzie, regional partner at Begbies Traynor, said: “Companies in the Humber region, like those across the UK, have been on a roller coaster of change and uncertainty over the last two years, making planning and forecasting extremely difficult.
“The unprecedented challenges they have faced range from stop-start operations in the midst of successive shutdowns, to adapting to ever-changing Covid restrictions and now dealing with ongoing problems around severe staff shortages and global supply chain disruption.
“While the economic distress in the region seemed to level off earlier in 2021, with the impact of a new and highly contagious variant just before the normally busy Christmas season, we are already seeing a worrying increase in signs of early economic problems.”
In the Humber region, a number of sectors saw an increase in “significant” distress since the previous quarter, with utilities (up 100 percent), financial services (up 56 percent) and travel and tourism (20 percent increase) among the worst affected. In addition, bars and restaurants as well as printing and packaging saw an increase of 13 per cent.
Red flags refer to companies that have had CCJs of less than £ 5,000 reported against them.
Mackenzie said: “After such a difficult period, the coming year unfortunately also seems to be fraught with problems for the region’s businesses. The additional pressure from rising prices and inflation when energy costs rise dramatically is likely to put pressure on both businesses and consumers.
“While the government appears reluctant to provide more assistance to companies affected by the recent Omicron outbreak, companies will also be faced with the withdrawal of pandemic support and tax increases. With hard times ahead, we advise another time directors to seek professional advice at the first signs of financial distress when more opportunities will be open to them. “
In terms of levels of more advanced or ‘critical’ distress – referring to companies having financial problems such as CCJs of more than £ 5,000 lodged against them – in the Humber region there was a 14 per cent drop compared to the third quarter 2021, while the UK as a whole saw an increase of 1 per cent.
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