Pictured: John Kelly
Birmingham businesses face a stern test this winter as the cold
wind of a continuing recession blows through the Midlands
economy.
That's the verdict in the latest Begbies Traynor Red Flag Alert,
the quarterly report which monitors a series of indicators of
company distress.
The Midlands region has seen a 56 per cent increase in critical
problems in the third quarter compared to the same quarter last
year.
Birmingham in particular saw a significant increase of 216 per
cent in the same quarter.
John Kelly, regional managing partner at Begbies Traynor's
Birmingham office, said: "The statistics reflect the growing
uncertainty facing many businesses in the Midlands and in
particular in the Birmingham area.
"The national picture identified a growing north-south divide in
the levels of business distress and evidence of the impact of
public sector cuts starting to hit home.
"There has been a material increase in problems in the past
quarter across the North East, North West, Yorkshire, the Midlands,
the East of England and Wales compared to decreasing distress in
London and the South East, according to the figures released
today," he said.
Against a UK average rise of two per cent, the number of
businesses facing both significant and critical financial distress
in the past quarter dropped by six per cent and three per cent
respectively for London and the South East, while all other regions
in England and Wales faced increased levels of distress.
Hardest hit was the beleaguered North East with a 19 per cent
increase in business distress, followed by the North West with a 12
per cent rise. Yorkshire, the Midlands, Wales and the South
West regions all saw increases in business distress of ten per
cent.
In Scotland, where public sector cuts have come much later than
in the rest of mainland UK due to the timing of the Scottish
elections, levels of distress have fallen quarter on quarter, but
the impact of recent and expected future cuts will not be felt in
wider business distress for some time.
Ric Traynor, Executive Chairman of Begbies Traynor Group, said:
"As the threat of public sector job cuts became a reality in the
past few months, a North-South divide has begun to emerge with the
South East and London areas showing much greater economic
resilience than the rest of England and Wales.
"Many of the regions worst affected - such as the North East and
North of England - are heavily dependent on the public sector so it
is telling that these areas are witnessing increased levels of
financial distress.
"The UK is seeing widely varying regional distress levels as a
variety of sectors see polarised levels of hardship. It is
not surprising then, that we will end up with different areas
seeing tougher economic times than others, especially where the
public sector has historically been most important.
"Figures recently published by the ONS show that the second
quarter of 2011 saw the number of public sector employees fall by
111,000 - the biggest fall since records began in 1999. This
reduction in the employee base not only affects those individuals
who have lost their jobs, but also local businesses dependent on
public sector contracts."
For more information about Begbies Traynor, please visit their
website here: www.begbies-traynorgroup.com