In their Red Flag Alert report, which monitors UK firms facing financial difficulties, they say that there has been a 15 per cent rise in the number of companies facing “significant” or “critical” distress in the first quarter of this year compared with a year ago.
Of course, it could be argued that anything outside food, drink and warmth is non-essential but the hardest hit areas appear to have been leisure and the service industries. Compared with the first quarter of 2010, the level of combined distress (Significant and Critical) in the Bar & Restaurant sector was up by 68 per cent; businesses in the Leisure & Culture sector were faced with a 60 per cent rise and the Sports & Recreation sector show a 23 per cent rise.
Ric Traynor, Executive Chairman of Begbies Traynor Group said: “…it seems likely that a fall in consumer confidence and spending power driven by anticipated job losses lies at the core of the leisure sector's troubles."
The other sector seen to be experiencing a major rise in the number of companies in trouble is professional services, which is up by 61 per cent on the same quarter last year.
According to the report, companies with high fixed costs are being hardest hit and a stale property and corporate deals market hasn’t helped. According to Traynor, such companies “are finding the current market conditions increasingly difficult as their revenues fail to recover and the scope for further cost reductions becomes more limited."
In uncertain times, with looming redundancies across the board, it would appear that people are being careful where they spend – and save – their money.
For more information, please visit www.glazers.co.uk
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