Financial distress amongst businesses in Southampton shot up sharply in the final three months of 2017 compared to the same quarter of the previous year, new figures have shown.

Data released by the UK’s leading independent business recovery specialists Begbies Traynor showed 2,522 businesses in the city have faced some level of financial distress in fourth quarter (Q4) of 2017 compared to 1,893 during the same period in 2016, an increase

of 33 per cent.

Begbies Traynor's Red Flag Alert for Q4 2017, which monitors the financial health of UK companies showed that nationally there had been a rise of 36 per cent on the same period last year.

In Southampton,t the sectors faring worst were construction, where numbers went up from 313 to 412, bars and restaurants (up 20 per cent from 87 to 104), media (up to 86 from 69, a hike of 25 per cent), and industrial transportation and logistics (rising from 55 to 83).

Begbies Traynor warns that a combination of rising inflation, stagnant real wage growth, a weak Pound, political uncertainty, November’s rise in interest rates, and the ever-tightening credit environment putting increasing financial stress on businesses across the country were pi9ling the pressure on businesses.

As a result, 258,349 UK businesses ended the year in a position of negative net worth, while a further 154,251 demonstrated a worrying increase in their working capital deficit.

However, there was more positive news for businesses with a strong export book who benefitted from the devaluation of the pound, particularly within the manufacturing and engineering sector.

Gavin Savage, partner at Begbies Traynor's Southampton office, said: “ A perfect storm of macroeconomic headwinds pushed nearly 500,000 firms into significant distress.

Our data shows that no region or industry has entered the New Year unaffected, as the whole economy felt the combined drags of the inflationary environment, higher interest rates, growing business uncertainty, tighter credit availability and subdued consumer spending.

“When the overall business environment is so challenging, unfortunately there can be few real winners, however certain sectors of the economy are certainly feeling the pinch more than others. In particular, the vast UK support services sector saw a spike in distress as their stretched customers reined back spending, the construction industry saw the lowest levels of optimism in five years while the real estate sector felt the full impact of the increasingly stagnant UK housing market.”