THE number of ailing businesses in the Bournemouth area was up this summer even before the turmoil that led to this year’s second change of prime minister.

Begbies Traynor’s Red Flag Alert, which monitors the financial health of companies, found 1,814 struggling businesses in the area between July and September.

That was up four per cent on the previous quarter and up five per cent on the same period in 2021.

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Real estate and property businesses were the most affected, with 277 companies in significant financial distress, the research found. The biggest quarterly rises were in retail and professional services, with both sectors seeing a 10 per cent jump.

Nationally, the Red Flag Alert found 610,000 businesses in significant distress, amid rising costs and fragile confidence. The figure was up eight per cent year-on-year and four per cent on the previous quarter.

Julie Palmer, partner at Begbies Traynor in Bournemouth, said: “We are in economically turbulent times, where businesses are being battered on multiple fronts by increasing costs in energy, raw materials and labour. Coupled with the increased cost of borrowing and the prospect of rising corporation tax now around the corner, this is a very challenging time to be in business.  

 “The economy, which had already been weakened by two years of pandemic disruption, now faces the very real possibility of a recession at a time when businesses were in desperate need of a sustained period of stability so they could get back on their feet. 

 “What we have instead is a situation where input costs are soaring and businesses that borrowed to survive for years and are stuck with levels of debt that they may be unable repay – especially with interest rates expected to rise to circa six per cent in 2023.   

 “We’d urge company directors and business owners who are worried about their ability to trade through this difficult period to seek professional advice in order to understand what steps they might be able to take to put them on a stronger footing.”  

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Begbies warned that the prospect of interest rates climbing above five per cent could force distressed businesses into insolvency, as debt built up over the past decade and increased during the pandemic becomes unserviceable.

County court judgements – often an early indicator of financial distress – totalled 63,831 in the first nine months of 2022, more then the whole year in 2021 or 2020 and the second highest total since 2010.

Winding up petitions, a much more serious action lodged by creditors, were 237 per cent higher than in 2021