More than 1,000 Portsmouth businesses in severe financial distress due to coronavirus pandemic
MORE than 1,000 of Portsmouth businesses were in significant financial distress during the past three months – with the ‘worst’ still to come according to figures from an insolvency firm.
Portsmouth saw a four per cent increase in the number of businesses struggling between April and June, Begbies Traynor announced.
It means a total of 1,036 businesses were thrown into crisis following the coronavirus pandemic – up six per cent from the same period last year.
Real estate, property and support services were among the sectors suffering most with the number suffering increasing 19 per cent and six per cent respectively.
Even though some sectors showed some signs of relative stability – including telecommunications and IT – many businesses are bracing themselves for further slowdown in the next financial quarter.
The Red Flag Alert data, which monitors the financial health of UK companies, reveals that nationally a record 527,000 businesses were in significant financial distress during the period. This was the seventh consecutive quarterly increase, and a rise of 33,000 since the beginning of the year.
The firm is also warning that the true number could have been higher but for reduced court activity due to the coronavirus pandemic, which has significantly reduced the number of County Court Judgements and other legal action being taken against indebted companies.
Julie Palmer, partner at Begbies Traynor in Portsmouth, said: ‘These are undoubtedly the toughest of times for all businesses. The true picture of financial distress may be concealed by inaction on insolvent and distressed businesses in the courts.
‘This means we are more likely to see the real impact of the pandemic during the second half of 2020.
‘There have been unprecedented company support measures from the Treasury during the pandemic, with both the furlough scheme and access to government backed funding schemes.
‘But unfortunately, as the chancellor himself has admitted, not all businesses and jobs can be saved. While it is likely that this situation will get worse for many businesses before it gets better, those businesses that have the capital and the management ability will be better placed to adapt to the new normal.’