Despite the worsening UK-wide economic picture, Northern Ireland has put in a stalwart performance in the last quarter seeing falling levels of both early and advanced financial distress according to the latest Red Flag Alert data from leading independent business rescue and recovery specialist Begbies Traynor.
In Q3 2023, there was a 17.9% fall in levels of businesses in the province experiencing advanced or ‘critical’ distress since the previous quarter, and a drop of 31.6% compared with the same period the previous year. This type of severe distress saw just 538 businesses in Northern Ireland facing major financial problems.
Looking at early or ‘significant’ distress, in Northern Ireland, there was a slight uplift of 1.9% quarter-on-quarter, representing 7,526 businesses in quarter three. This type of distress (which refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth) fell by 5.5% since the same period the previous year.
In contrast, across the UK, critical business distress increased by 25% on the previous quarter and by almost 2% year-on- year, to affect 37,722 firms nationally. Almost half a million companies (478,176) nationwide saw incidences of significant distress rise with an uplift of 8.7% quarter-on-quarter, and by 4.7% compared with Q3 2022.
Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “It is very encouraging to see such resilience from businesses in Northern Ireland, particularly in the face of the challenges of rising operating costs and falling customer demand which have resulted in increased business distress across the UK as a whole.
“However, with high interest rates continuing, prospects for the wider economy are far from rosy and we advise business owners to remain cautious. As ever, they would be well advised to seek professional support at the first signs of financial problems when the most options will be available to prevent the situation from spiralling out of control.”
According to the latest Red Flag Alert, construction, real estate and property services, support services, and general retailers saw the highest numbers of Northern Irish businesses in critical distress.
There were 123 construction firms in the province suffering from advanced financial problems, a fall of 27.2% since Q2 2023. Real estate and property services accounted for 64 severely distressed businesses (down by 29.7%); support services accounted for 59 (up by 22.9% on Q2 2023), while 44 retailers were in critical distress (a rise of 83.3%).