Are we over the worse yet?

You know things are bad when the only positive numbers are those shown in the Business Distress Index (produced by Real Business Rescue). This looks at the financial health of UK SME’s and gives a regional breakdown of distress levels.

Regionally it shows that, compared to the same period in 2024, the South East has 11% more companies reporting being in critical financial distress and London +17% when compared to the North East, where levels were a more modest +3%. Worst effected sectors in each region are Support Services +31%, Real Estate +28% and Construction +16%

Smaller businesses have all endured challenges throughout recent months including higher business taxes and increased operating costs due to higher Employers’ National Insurance Contribution and National Living Wage. If you couple this with inflation, hopefully peaking soon, it is little wonder that companies are increasingly having to report that their finances are in a critical state and have little room left to manoeuvre should a further downturn happen.

This illustrates perfectly the effect that economic uncertainty has on the operation of SME’s nationwide, as businesses are forced to absorb substantially higher operating costs and are left with increasingly more expensive borrowing to raise funds to offset their balance sheets and keep creditors, if not happy, then at least at bay for now.

It is not all bad news though as some industries are bucking the trend, with Printing and Packaging showing a drop of 23.5% in the number of businesses in critical financial distress, Manufacturing likewise -11.6% and Industrial Transportation and Logistics -10.1%

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