There sadly isn’t a lack of indicators of the exceedingly challenging situation for many small businesses in the UK – and beyond – at the moment. Sure enough, another one has emerged, with it being reported that small and medium-sized enterprises (SMEs) are experiencing corporate distress at levels not seen since the middle of 2020.
That period, of course, is well-remembered on account of the considerable difficulties SMEs were suffering back then as the COVID-19 crisis hit Europe with full force.
The current predicament for many such firms is somewhat different, with the UK economy as a whole barely registering growth, and climbing interest rates putting ever-greater pressure on liquidity.
However, there won’t be too much shock at the news that – according to data put together by a law firm, and reported by Yahoo! Finance – SMEs’ corporate distress levels across the UK and Europe reached their highest level since mid-2020 in the three months to May 2023.
“Smaller corporates are the first to feel the strain”
The law firm in question is Weil, Gotshal & Manges. And Andrew Wilkinson – who co-helms Weil’s London Restructuring practice – said: “It should come as no surprise that smaller corporates are the first to feel the strain.”
He further explained: “Whereas large companies have the scale to access deep pools of capital, diversify their funding and hedge exposures, smaller corporates have fewer options. They also lack the pricing power of larger corporates in an inflationary environment.”
The Yahoo! Finance report stated that the study’s broader corporate distress index – in which large companies are also included – eased slightly compared to the situation in February, thereby underlining Mr Wilkinson’s point about smaller firms particularly struggling.
For the purposes of the report, corporate distress was defined as including uncertainty about corporate financial health and ability to service debts.
And there was further bad news for many businesses, such as those making use of our own accountancy services in Newton Abbot here at TS Partners: the UK was found to be the most distressed country.
This had much to do with Britain’s lethal combination of persistently high inflation and aggressive increases in interest rates, which equated to a 4.8 distressed level, compared to an average of 3.9 for the overall index.
On a sector-by-sector basis, meanwhile, it was real estate that recorded the highest level of distress for the second quarter in a row. However, there was also concern about distress in the financial sector.
Talk to the TS Partners team about how we can assist your business’s efforts to survive and thrive
Amid such a cocktail of adverse factors, it has rarely been so important for UK businesses to take every possible step to protect themselves against risks to their survival and growth.
The good news is that our own professionals can provide accountancy services in Newton Abbot, Plymouth, or Wellington that can help give your organisation the best chance of thriving in difficult times. To learn more about our wide-ranging and in-depth solutions and expertise, please don’t wait any longer to enquire to your nearest TS Partners office.
In recent years, we’ve witnessed a significant shift among company car drivers, especially directors of owner-managed businesses, towards Electric Vehicles (EVs) to capitalize on the available t…
What is Land Remediation Tax Relief? If your property is owned or leased by a limited company, you (whether landlord or tenant) may be able to get tax relief on the costs of removing the asbestos and …
Navigating the UK business terrain, it’s clear that the right funding can pivot your growth trajectory. With this in mind, TS Partners has teamed up with Swoop, creating a bridge between your f…
Despite the limited tax breaks for UK commercial property owners or investors, many overlook the significant tax relief provided by capital allowances. This oversight often arises from unfamiliarity w…
For a while now, there have been persistent suggestions that the UK could be on the verge of entering a recession – and according to at least one authoritative source, that moment may finally come l…
Following an extended period of time in which the outlook did not seem greatly positive for very many businesses in the UK, our experts at TS Partners were cheered to read that according to one new bu…
Talk of recession risk for the UK is becoming a very well-worn theme at this point, but it is also sadly true that many an accountant in Newton Abbot – and their clients – must bear such a risk in…
As things stood at the time of this article being written, the destination of the Women’s World Cup trophy was yet to be decided; nonetheless, the England team has already captured the imaginations …
Firms around the South West of England – including many taking advantage of TS Partners’ expertise in accounting in Newton Abbot – seem to be remaining confident as the summer of 2023 wears on, …
Recent months, it is fair to say, have been ones of ups and downs for many UK business owners, who have been anxious to see reasons for optimism. The UK did at least avoid what had once been a widely …
It has been clear for all to see in recent times that firms across the UK have been buffeted by a range of adverse factors, not least inflation and climbing interest rates. However, at least one recen…
According to at least one source, it would seem that confidence in the UK economy among the country’s business leaders has declined markedly recently, erasing the progress that had been made in this…
In news that will not be cheering for the Bank of England (BoE) as it continues to struggle to drive down inflation, it has emerged that a far greater number of companies in the UK services sector are…
Amid continuing concerns about inflation and the economy, it seems that the UK Government has at least some reason for cheer: the “tax gap” for the year 2021 to 2022 has remained at its lowest eve…
It isn’t just businesses up and down the South West of England and beyond – including many that have reached out to TS Partners about our digital accountancy in Plymouth, Wellington, or Newton Abb…
In a development that has been described by one industry expert as “somewhat ironic”, it has emerged that the non-departmental funding body UK Research and Innovation (UKRI) owes HM Revenue & …
UK organisations that are keen to take responsible and compliant approaches to their tax and accounting in Newton Abbot, Plymouth, or Wellington may be interested to read about new Government plans th…
No doubt that for many of our blog readers, the various business surveys, indexes, and barometers will be key topics of reading and conversation, as business owners around the UK assess the prospects …