Optimism pushes ‘business distress’ to all-time low
9th June 2015

Fewer businesses than ever are showing signs of ‘business distress’ as more and more show some signs of growth, according to figures from insolvency trade body R3.

Every indicator of distress tracked by R3 is at its lowest since the research began. 10% of businesses are experiencing decreased profits, 11% are experiencing falling sales volumes, 6% are seeing market share fall, 8% are regularly using their maximum overdraft, and 6% are making redundancies.

Business confidence is strong with just 4% of businesses expecting their activity to decrease in the next year. 47% expect it to increase and 48% think it will stay the same.

R3 President Phillip Sykes said: “Having stayed constant throughout 2014, UK business distress levels have fallen once more. Many companies will feel they have successfully negotiated the trickier parts of the rapid economic growth we saw last year. As growth slows, businesses are less at risk of over-extending themselves.”

Smaller businesses are recording the greatest drop in signs of distress. Only 20% of sole traders are reporting one or more signs, compared to 50% in November 2014.

Phillip Sykes added: “It is encouraging to see difficulties for smaller businesses easing. It’s been a particularly difficult few years for many sole traders and they’re only now beginning to see recovery.”

www.r3.org.uk