The report for Q1 2025, before the US announcement of global trade tariffs on 2 April, shows ‘significant’ or early-stage business distress dropping by 12% and affecting 40,000 business in Yorkshire, almost 6,000 fewer than in Q4 2024. The year-on-year trend in distress continued to be upward, however, with a 6% rise in distressed firms since Q1 2024.
The pattern was replicated across the UK with a 12% fall in business distress since the last three months of 2024 and a 4% hike in distress levels year on year, affecting (579,000) companies.
In Yorkshire some sectors saw distress levels fall both quarterly and year on year. Food and drink production (down 12% since last quarter and 4% year on year), industrial transportation and logistics (down 11% since last quarter and 7% year on year), manufacturing (down 17% since last quarter and 3% year on year), and printing and packaging (down 11% since last quarter and 13% year on year), all showed a consistent decline in distress, chiming with this month’s reports of economic growth and falling inflation for the UK at the start of this year, and before Donald Trump’s “liberation day” announcements.
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “There are signs that the UK economy was making positive progress in the first three months of the year, with the rate of inflation dropping to 2.6% in March and better growth than had been predicted - and our Red Flag data bears that out.
“But, with Trump’s global tariffs threat now a reality, that fragile optimism now looks to have been the calm before the storm. As long as there’s heightened uncertainty over exactly how the escalating trade war will hit our economy, businesses in Yorkshire and across the UK will unfortunately not come out of this unscathed, with SMEs likely to find themselves least resilient in the face of economic fallout.”
He added: “Inflation is forecast to increase sharply next month, with household bills going up and that in itself will inevitably suppress consumer spending. But meanwhile, as global turmoil builds, there’s huge uncertainty over whether Chinese imports that had been destined for the US market will make their way into the UK, and that’s combined with severe disruption to supply chains impacting, among many others, the very sectors that, in Yorkshire, were showing signs of recovery: manufacturing, print and packaging and industrial logistics.
“These are certainly times in which businesses would do well to batten down the hatches and, as ever, our advice to owner-managed businesses who feel they are facing apparently insurmountable financial challenges is to seek professional advice sooner rather than later. You may find there are more options out there than you think to turn around and stabilise a struggling business.”
Sectors suffering the largest year-on-year increases in distress across Yorkshire were hotels and accommodation (up 21%) and real estate and property services (up 17%). Those industries which saw the biggest quarter-on-quarter falls in distress were financial services (down 20%), travel and tourism (down 19%) and automotive (down 16%).