An increasing number of Northern Ireland firms are facing “critical” financial distress, many of them after taking on debt when interest rates were low, and may be “on the path to insolvency”, a corporate recovery consultancy has warned.
In the fourth quarter of 2023, there was a 38.9 per cent rise in the number of businesses reporting the critical distress, the most advanced level of distress, according to Begbie Traynor’s latest Red Flag alert.
The study, which tracks financial distress levels through financial and legal filings and other sources, indicates that some 747 businesses in the North were facing severe difficulties at the end of last year, down around 8.9 per cent from the fourth quarter of 2022.
However, quarter-on-quarter increase was steeper in North than elsewhere in the UK where there was a 25.9 per cent uplift in the number of businesses in critical distress, Begbie Traynor said.
Trump win has liberal Americans looking at move to Ireland
Can a forgotten child claim an inheritance when his father dies?
Planning a career break? How to live without your salary and dealing with a pension gap
‘I laughed when a friend recommended I buy a single bitcoin when the price was €300. It would now be worth €55,000’
“While the economic picture across the UK is far from rosy, it is extremely worrying to see Northern Ireland experiencing one of the sharpest increases in advanced critical distress since the previous quarter,” said Lawrence O’Hara, head of Begbie Traynor in the North. “Having taken on debt when interest rates were low, growing numbers of businesses are now paying the price.”
Some sectors were worse affected than others, according to the research. Utilities firms saw a 300 per cent rise in critical distress levels, likely due to see-sawing energy prices, while food and drug retailers saw a 180 per cent rise in distress levels against the backdrop of soaring food prices and drugs shortages.
Mr O’Hara said: “With the cost of living crisis impacting consumer spending and continuing high inflation, businesses within Northern Ireland are struggling to regain stability and, unfortunately, many of these businesses may now be on the road to insolvency. It is imperative that these businesses should seek professional advice as soon as they can, to avoid financial problems from escalating.”
More than 200 businesses collapsed in Northern Ireland in 2023, figures from the Insolvency Service showed recently, roughly on par with 2022.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Find The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
