19:02 ET<\/span>
\n<\/span><\/p>\nAn increasing number of UK firms are showing signs of financial distress, a report suggests.<\/p>\n
Corporate recovery experts Begbies Traynor have released their Red Flag Alert, which monitors a series of indicators of company cash woes.<\/p>\n
And they say 186,554 firms experienced “significant” or “critical” financial distress in the first quarter of 2011, compared to 161,601 a year earlier.<\/p>\n
Begbies said there had been problems in the leisure sector in particular.<\/p>\n
‘Impending redundancies’<\/span><\/p>\nThe 15% rise in firms facing financial troubles was partly down to members of the public cutting discretionary spending, in the face of anticipated job losses.<\/p>\n
The worst hit sector was in bars and restuarants, where firms facing difficult monetary issues had risen by 68% on the first quarter of 2010.<\/p>\n
Meanwhile the leisure and culture, and sport and recreation sectors were faced a 60% and 23% rise respectively in firms facing tricky times compared to 12 months previously. <\/p>\n
Professional services was another area hard hit, seeing a 61% hike in firms in trouble.<\/p>\n
The Red Flag Alert report pointed out that a significant number of public sector staff “will have received formal notification of impending redundancies which will have had an impact on discretionary consumer spending”.<\/p>\n
Costs squeeze<\/span><\/p>\nBegbies Traynor Group boss Ric Traynor said it seems likely that a fall in consumer confidence and spending power driven by those anticipated job losses, was at the core of the leisure sectors problems.<\/p>\n
“Over 15,000 firms in the professional services sector are showing signs of significant or critical problems – partly driven by a stale property and corporate deals market – often the drivers for an active professional services community,” Mr Traynor said.<\/p>\n
He said it appeared firms which operated with a high fixed cost base were finding the current market conditions increasingly difficult “as their revenues fail to recover and the scope for further cost reductions becomes more limited”.<\/p>\n<\/p><\/div>\n<\/p>\n
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