Walsall sees spike of businesses 'in distress' as over 13,000 firms on the brink in West Midlands, new figures show
More than 13,000 West Midlands companies are now classed as being in ‘significant’ economic distress, according to new figures.
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Ongoing economic uncertainty, coupled with the impending impact of the tax, national insurance and national minimum wage increases announced in the October 2024 UK Budget, are all contributing to business stress in the region, with 13,045 at risk of economic failure, according to a new report from corporate recovery firm Begbies Traynor.
The ‘Red Flag Alert’ report, which monitors the financial health of UK companies, shows Walsall saw the greatest annual rise of 31.2%, followed by Dudley (22.7%), Birmingham (21%), Wolverhampton (18.9%) and Stafford (13.9%).
The increase in financial distress is prevalent in multiple industry sectors across the region, with media businesses seeing a 40.7% increase compared to the same time in 2023, and real estate & property also suffering with a 32.7% rise.
Nationally, the latest Red Flag Alert research for Q4 2024 recorded 654,765 businesses in significant distress, which is 21.3% higher than the same period in 2023. In addition, there has been a worrying surge in the number of businesses in the UK entering ‘critical’ financial distress in the final quarter of 2024, rising by 50.2% to 46,853 companies.
Commenting on the figures, Dan Trinham, director at Begbies Traynor in Dudley, said there was "no easy fix".
"Even at this very early stage, the outlook for the rest of 2025 is challenging, and many companies are clearly struggling to adapt to the compounding issues they are facing," he said.
"Unfortunately, there is no easy fix, which will be very unsettling for businesses who are struggling to tread water already.
“For many companies, which were already dealing with rising operational and borrowing costs, the increase in national insurance contributions and the national minimum wage announced at the last UK Budget, could result in further financial strain at a time when confidence is already low.
“So, in the absence of a reduced tax burden and a strong economic recovery, unfortunately it is likely that the number of insolvencies will continue to rise in 2025 as firms struggle to cope with a perfect storm of rising costs, financial instability and fluctuating market conditions.”
