Thousands of Birmingham businesses staring down barrel, report reveals

Thousands of Birmingham businesses are staring down the barrel in 2016 according to a new report which reveals rising levels of financial distress.

The Begbies Traynor Red Flag Alert from the last quarter of 2015 shows 4,320 businesses in Birmingham are facing “significant” financial distress, up 14 per cent across the year.

Across the Midlands, the number rose from 28,772 to 33,893 at the turn of the year.

The research reveals that all sectors of the economy saw an increase in financial distress over the past 12 months.

Worryingly, the worst performing sectors were those that are most influential to the UK’s economic growth, with service, manufacturing, construction and real estate firms all reporting more distress.

Begbies Traynor’s analysis chimes with George Osborne’s warning last week that Britain faces a “dangerous cocktail” of global risks that could place the UK’s economic recovery in danger, adding that the country needs to be “shaken” out of its complacency.

John Kelly, Midlands regional managing partner at Begbies Traynor, says: “While many analysts are predicting that the UK’s growing economy will become the strongest in Europe in the coming years, 2016 is going to be fraught with challenges for many businesses.

"Rising financial distress levels in the Midlands demonstrate that the region is vulnerable to national and global economic events. As one of China’s largest trading partners in Europe, our region should be extremely concerned by the slowdown and economic adjustment taking place there.

"And if interest rates rise in the coming months, then many businesses that are reliant on low rates for their survival will really struggle to continue.”

Ric Traynor, executive chairman at Begbies Traynor, pointed to the introduction of the new National Living Wage in April as an other cause for concern.

He added: “Struggling businesses should not expect any respite in 2016, with the UK economy facing greater headwinds this year from slow global growth, lower levels of business investment and the highest levels of consumer debt seen for five years.”