R3 Business Distress Index shows business-led recovery still stalling in East of England
Private companies in the East of England have experienced increases in 11 of 13 key signs of business distress in the three months to October, according to insolvency trade body R3. The quarterly R3 Business Distress Index also highlights that a business-led economic recovery is still some way off, with one in ten (10%) East Anglia businesses regularly using their maximum overdraft facility. The statistics also show that almost half of local companies (41%) are experiencing decreased profits over the previous quarter.
For the first time, the R3 report also asked regional respondents if they are experiencing a number of growth indicators. The results, which mirror the distress signals, found that only 16% are experiencing increased profits, compared to the 41% experiencing a decrease in profitability.
The R3 growth index also found that only 13% of East Anglia businesses have seen their market share expand, which is one of the lowest regional growth figures in the UK. Just over one fifth (21%) have experienced a decrease in market share. The results also highlighted that local companies operating in the services sector are more likely to be experiencing growth than those in the manufacturing sector.
R3’s eastern region chairman Shay Lettice, a partner at Cambridge accountancy firm Peters Elworthy & Moore (PEM), said: “These latest quarterly statistics show that businesses are not out of the woods yet, with signs of distress increasing compared to the previous quarter on most key indicators. This worrying trend largely mirrors the slowdown in GDP growth the UK economy experienced last quarter.
“While current economic and corporate challenges may not be severe enough to push businesses over the edge, prolonged periods of distress will trigger an increase in formal insolvencies, compounded by the fact that more companies are being forced to use their maximum overdraft facilities. The first few years after a recession are historically difficult as it is some time before businesses can rebuild their reserves sufficiently to support expansion.”
The R3 research also found that in spite of the growth of some local businesses, other key indicators of health remain low with only 6% of East Anglia companies confirming an increase in export orders and only 4% increasing the size of their workforce.
Shay Lettice continued: “The private sector has some way to go before it can deliver the kind of expansion the Government yearns for to drive the economy forward. Whilst it is encouraging that there is an element of business growth here in East Anglia, important measures such as increasing exports and employment register poorly and do not bode well for immediate regional recovery.”
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For further information please contact:
Judy Hanley, Hanley PR
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Antoinette Huka, Communications Officer
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