Business
Latest Red Flag Alert Report for Q3 2017
Latest Red Flag Alert Report for Q3 2017.
About this update from Btg Consulting Plc
[{"type":"text","content":"\n \nRNS Number : 1725V Begbies Traynor Group PLC 01 November 2017 \n\nBusiness distress on the rise ahead of interest rate decision\nc.450,000 UK businesses now suffering from 'significant' financial distress; up 27% year on year \n \nAhead of Thursday's decision by the Monetary Policy Committee on whether or not to increase interest rates, new research from Begbies Traynor, the UK's leading independent insolvency firm, reveals that nearly half a million businesses across the UK are in a state of 'Significant' financial distress, even before the effects of a potential interest rate hike are felt. \n \nAccording to Begbies Traynor's Red Flag Alert research for Q3 2017, which monitors the financial health of UK companies, 448,011 businesses were experiencing 'Significant' levels of financial distress at the end of the quarter, up 27% compared to the same period last year (Q3 2016: 352,552); a worrying statistic that could increase still further should interest rates rise this week. \n \nThe research highlights that almost 250,000 of these companies (Q3 2107: 248,619) ended the period with negative net worth, representing a sizeable population of so called \"zombie\" companies that have managed to survive thanks to the prolonged low interest rate environment and flexible labour market, but which do not have adequate working capital to fund any growth or absorb rising input prices.\n \nBegbies Traynor warns that with the prospect of an interest rate rise alongside increasing employment costs, due to changes in the minimum wage combined with HMRC's crackdown on personal service companies (often set up to avoid employers' national insurance), many of these struggling companies will not have the reserves available to survive.\n \nThe research also shows that 'Significant' financial distress rose across every sector and region of the UK over the past year, with the Professional and Financial Services sectors being worst affected, increasing 42% to 26,113 and 34% to 11,079 struggling businesses respectively. Meanwhile the UK's Support Services, Constru...