According to new data, there has been a 25 per cent increase in the number of businesses in ‘critical’ financial distress compared to the same quarter last year and a further 481,000 businesses in ‘significant’ financial distress.
In Q4 2018, figures revealed that there were 2,183 companies classified in ‘critical’ and 15,000 in ‘significant’ financial distress.
Last year, the hardest hit sectors were real estate and property, these industries saw a seven per cent (3,134) increase in the number of companies in ‘significant’ distress from Q3 to Q4 and there was also a nine per cent year on year increase.
Other sectors that struggled last year were companies in support services, construction and professional services, who all suffered a four per cent increase in companies entering ‘significant’ financial distress during Q4 2018.
Despite the publicised high street failures, figures revealed that there was only a two per cent (529) increase in the number of companies in significant financial distress between Q3 and Q4 2018.
Nevertheless, it is important to take into consideration that Q4 is typically a strong cash trading period for most retailers, with Q1 2019 being the likely period where this sector will struggle.